US operator Sprint Nextel posted an anticipated increase in losses for the fourth quarter of 2011, noting increased subsidies related to its launch of Apple’s iPhone late last year.
The company said it sold 1.8 million iPhones in the quarter, with 40 percent going to new customers. However, its wireless equipment net subsidy grew to approximately US$1.7 billion, compared to around US$1.2 billion in the 2010 period, as a result of the launch of the iPhone 4 and iPhone 4S.
Sprint said that based on its internal estimates, the combined impact of launching the iPhone and its ongoing Network Vision modernisation project reduced its adjusted operating income before depreciation and amortisation (adjusted OIBDA) by around 8.8 percentage points, to 10.8 percent.
The company said that Network Vision “remains on schedule and on budget.”
Investors have previously expressed concern about the effect of both the iPhone launch and Sprint’s network modernisation plans – including LTE rollout – on its earnings.
The company said that net subscriber additions of 1.6 million during the quarter – its best in six years – took its total subscriber base to the highest level in its history. The bulk of these additions were wholesale and affiliate subscribers, however, as “a result of growth in MVNOs reselling prepaid services.”
At the end of the period, the company served 55 million mobile customers, including 33 million contract subscribers. It gained 161,000 contract customers during the quarter, compared to 58,000 in the comparable 2010 period.
In a statement, Dan Hesse, CEO of Sprint (pictured), said: “Our strong fourth quarter performance illustrates the power of matching iconic devices like the iPhone with our simple, unlimited plans and industry-leading customer experience.”
For the quarter, the company reported a net loss of US$1.3 billion, up from US$929 million in the fourth quarter of 2010, on operating revenue of US$8.7 billion, up 5 percent from US$8.3 billion.
The company said that a revenue increase from its mobile service and equipment sales were offset by a reduction in fixed line revenue.
Wireless retail service revenue of US$6.9 billion for the period represented an increase of more than 7 percent compared to the fourth quarter of 2010. It attributed this to higher postpaid ARPU as well as an increase in the number of net prepaid subscribers, as a result of additional market launches by Assurance Wireless and Virgin Mobile – partially offset by lower prepaid ARPU.
The company said that in addition to the previously reported quartet of Houston, Dallas, San Antonio and Atlanta, Kansas City and Baltimore will also feature among its LTE launch cities.
The company noted a US$135 million impairment charge related to its investment in wholesale operator Clearwire.
Separately, Sprint yesterday announced a partnership with Orange Business Services intended to provide it with global machine-to-machine connectivity outside the US. This will enable it to offer Sprint-branded M2M connectivity in 180 countries.