Sprint’s third quarter 2013 results hint at prospects for better performance, going forward, on the gross revenue, average revenue per user, and subscriber growth fronts.
In the third quarter, mobile service revenue of $7.3 billion grew year-over-year for the 13th consecutive quarter, and Sprint managed to achieve its best-ever Sprint platform postpaid service revenue of $5.8 billion.
Sprint also had its best-ever Sprint platform postpaid average revenue per user of $64.28.
But Sprint also had an operating loss of $398 million.
To be sure, there were many moving parts in the third quarter. It was the first quarter when Nextel has failed to exist. So some of the contributors to operating income are one-time effects associated with shutting down Nextel, including the loss of 1.3 million Nextel customers, not all of whom decided to switch their service over to Sprint.
Also, for the balance of 2013, it is likely there will be some impact from the SoftBank acquisition of most of Sprint and the Sprint acquisition of the remainder of Clearwire that Sprint did not already own.
In that sense, the actual quarterly earnings are not so important. What will be important is what Sprint now can do, in terms of subscriber and revenue growth, now that it is essentially freed of the drag of Nextel losses.
In the first quarter of 2013, for example, Sprint lost 771,000 Nextel subscribers, offsetting all of the gains Sprint made in its branded “Sprint” business.
In the first quarter of 2013, the last before Sprint shut Nextel completely, Sprint added 568,000 prepaid Sprint subscribers and lost 224,000 wholesale and affiliate connections.
So though Sprint lost more than 400,000 customers in the quarter third quarter 2013, the damage really was done by the departing 771,000 Nextel customers. Retail Sprint operations actually gained 568,000 customers.
From this point forward, Sprint can live and die based strictly on its “Sprint” platform revenues and customer wins.
The 2005 Sprint purchase of Nextel now appears to have been a problem in almost every way. It was a $30 billion mistake, based on the write down Sprint took on the Nextel assets, as well as the complete closure of the Nextel network.
On an on-going basis, Nextel customer defections overwhelmed whatever gains Sprint was able to make on the other side of the house. In 2008, As AT&T and Verizon added a few million customers per quarter, Nextel saw a steady stream of subscriber losses.
Nextel had 13.2 million users signed to monthly service contracts at the end of 2007, down from 16.6 million in early 2006.
And In many quarters, the losses at Nextel offset subscriber gains at Sprint. In fact, Nextel has done nothing but lose customers since the second quarter of 2006.
Despite the lingering losses from its former Nextel business, Sprint has managed to keep growing revenue, in its key postpaid "Sprint" business, for 13 or so quarters.
Granted, Sprint still is losing customers overall, and still lost money in the third quarter of 2013. But it is making progress, and has yet to unveil precisely what it plans to do with the now-consolidated Clearwire spectrum and SoftBank assets.
The point is that Sprint, going forward, is going to be a different company, if only because it has shed the non-performing Nextel business that dragged down performance virtually every quarter at Sprint.
And once SoftBank gears up, one might reasonably expect that Sprint could turn around about as fast as T-Mobile US has done.
Edited by
Ryan Sartor 
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