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Sprint 2013 first quarter results


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http://newsroom.sprint.com/article_display.cfm?article_id=2574

 

24 April 2013

 

Sprint Reports First Quarter 2013 Results

 

 

  • Operating Income of $29 million, includes accelerated depreciation of approximately $360 million; Adjusted OIBDA* of $1.5 billion up over 25 percent year-over-year, highest year-over-year increase in more than 6 years
  • Sprint platform wireless service revenue of $7.1 billion is the highest-ever and increased nearly 9 percent year-over-year
  • Best-ever Sprint platform postpaid ARPU of $63.67 grew nearly 2 percent year-over-year
  • Sprint platform subscriber base reaches highest-ever level of 53.9 million
    • Sprint platform postpaid net additions for the 12th consecutive quarter
    • Postpaid Nextel recapture rate of 46 percent
    • Highest-ever total prepaid subscribers at 16 million

    [*]Strong smartphone sales of 5 million

    • iPhone® sales exceed 1.5 million with 43 percent to new customers
    • 86 percent of quarterly Sprint platform postpaid handset sales were smartphones

    [*]Network Vision continues to gain momentum

    • Exceeded target of 12,000 sites on air by the end of the quarter, and currently have more than 13,500 sites on air
    • Nextel network on track to be shut down at the end of the second quarter

 

 

OVERLAND PARK, Kan. (BUSINESS WIRE), April 24, 2013 - Sprint Nextel Corp. (NYSE: S) today reported operating income of $29 million, and Adjusted OIBDA* of $1.5 billion was the highest in nearly four years even as Sprint made significant investments in the business during the quarter. Sprint reported continued strong growth in the Sprint platform business, reaching highest-ever subscriber base and service revenue levels in the first quarter of 2013.

 

“This is a transformative year for Sprint and we’ve gotten off to a good start,” said Dan Hesse, Sprint CEO. “Record Sprint platform service revenue and subscriber levels fueled our performance. We achieved significant Adjusted OIBDA* growth while investing heavily to improve our network, expanding our 4G LTE footprint and offering customers the best smartphones with truly unlimited data plans.”

 

EPS and Operating Income Improve

Operating income for the quarter was $29 million as compared to a loss of $255 million in the year-ago period. Consolidated net service revenues of nearly $8 billion were flat year-over-year as Sprint platform growth offset declines in Nextel platform and Wireline revenues. The company reported a net loss of $643 million and a diluted net loss of $.21 per share for the first quarter of 2013 as compared to a net loss of $863 million and a diluted net loss of $.29 per share in the first quarter of 2012.

 

Adjusted OIBDA* Improves By Over 25 Percent Year-Over-Year

Quarterly Adjusted OIBDA* of $1.5 billion was the highest in nearly four years and improved by $311 million as compared to the first quarter of 2012. Adjusted OIBDA* improved year-over-year primarily due to growth in Sprint platform service revenue, lower cost of service and lower SG&A expense, partially offset by lower Nextel revenue.

 

Sprint Platform Achieves Record Revenue, ARPU and Subscribers

Sprint platform service revenue reached best-ever levels in the first quarter driven by all-time high postpaid ARPU and subscribers for the Sprint platform. Sprint platform postpaid ARPU grew by more than $1 year-over-year. Postpaid subscriber growth on the platform continued to benefit from better than expected recapture rates of Nextel customers as well as improved postpaid churn. Additionally, all three of the Sprint platform prepaid brands achieved net additions in the quarter and each reached highest-ever subscriber levels.

 

Unlimited Data and Iconic Smartphones Continue to Drive Growth

Eighty-six percent of quarterly Sprint platform postpaid handset sales were smartphones, including more than 1.5 million iPhones sold during the quarter. Forty-three percent of iPhone sales were to new customers, a rate that continues to outperform larger competitors.

Sprint continued to enhance its smartphone portfolio – launching HTC One® earlier this month and announcing plans to offer Samsung Galaxy S® 4 in the next few weeks as well as BlackBerry® Q10 and two Windows 8 phones later this year.

 

Network Vision Deployment Gains Momentum

Sprint made significant progress on the Network Vision deployment in the quarter, exceeding 12,000 sites on air during the first quarter. To date there are more than 13,500 sites on air compared to more than 8,000 reported on Feb. 7. The number of sites that are either ready for construction, already underway or completed has grown to more than 25,000.

As part of Network Vision, Sprint has launched 4G LTE in 88 cities, including Los Angeles, Boston and Charlotte, N.C. since the beginning of the year and expects that 4G LTE will be available in more than 170 additional cities in the coming months.

The company remains on track to shut down the Nextel platform at the end of the second quarter.

 

Third Parties Recognize Sprint Leadership

For the fourth time in a row, J.D. Power & Associates ranked Sprint highest in satisfaction with the purchase experience among Full Service Wireless Providers. Additionally, Sprint’s Boost Mobile prepaid brand was ranked highest in satisfaction with the purchase experience among Non-Contract Wireless Providers. Sprint also received U.S. Long-Haul Wholesale Carrier Excellence from ATLANTIC-ACM in the Brand, Network Performance, Customer Service and Voice Quality categories. Finally, Sprint collected the North American Mobile & Wireless Green Excellence Award from Frost & Sullivan.

 

Forecast

The company expects 2013 Adjusted OIBDA* to be at the high-end of the previous forecast of between $5.2 billion and $5.5 billion excluding the effects of the closing of strategic transactions.

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Network Vision continues to gain momentum

Exceeded target of 12,000 sites on air by the end of the quarter, and currently have more than 13,500 sites on air

 

 

From Robert's "NV Sites Complete - 23APR2013"

13,255/38,909

 

Isn't it interesting that the S4GRU number almost exactly tracks Sprint's "official" number.

 

That says something very positive about Robert, about his hard work on our behalf, and about his good relationships with his sources.

 

Yet another "Thank You, Robert!" in an ongoing round of "Thank You, Robert!"'s!

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Overall I would say Sprint did pretty well for the quarter. The numbers look good and 2.5ghz phones in the 3rd quarter!

 

I'd agree these numbers were much better than I was expecting. They continue to pick up subs, very positive to see. Given where they are at in NV, they've maintained enough revenue to "weather the storm" so to speak. In the very near future they will be dumping a ton of legacy costs and their cash flow will improve significantly.

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Overall I would say Sprint did pretty well for the quarter. The numbers look good and 2.5ghz phones in the 3rd quarter!

 

Was the mention of TD-LTE 2600 in the conference call? I do not see it in any of the documents here. And was the reference actually to "phones" or just "devices"? I am of the belief that we will probably see at least one TD-LTE 2600 capable hotspot or tablet before we do any handsets.

 

AJ

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Was the mention of TD-LTE 2600 in the conference call? I do not see it in any of the documents here. And was the reference actually to "phones" or just "devices"? I am of the belief that we will probably see at least one TD-LTE 2600 capable hotspot or tablet before we do any handsets.

 

AJ

 

I'm a secondary source on this one. I'm assuming Phil Goldstein was on the call.

 

"Interestingly, Hesse said that, assuming the Clearwire deal closes by mid-year, Sprint can begin launching devices in the late third quarter that take advantage of TD-LTE technology on Clearwire's 2.5 GHz spectrum."

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I'm a secondary source on this one. I'm assuming Phil Goldstein was on the call.

 

"Interestingly, Hesse said that, assuming the Clearwire deal closes by mid-year, Sprint can begin launching devices in the late third quarter that take advantage of TD-LTE technology on Clearwire's 2.5 GHz spectrum."

 

 

Yes, see, "devices." At this point, for all we know, the first device could be a TD-LTE toaster oven.

 

AJ

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Yes, see, "devices." At this point, for all we know, the first device could be a TD-LTE toaster oven.

 

AJ

 

I would totally buy a TD-LTE toaster oven, that thing would COOK!

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Earnings call transcript:

 

http://seekingalpha.com/article/1365951-sprint-nextel-s-ceo-discusses-q1-2013-results-earnings-call-transcript?part=single

 

A couple of salient quotes imo:

 

In the first quarter we continued to make strong progress in winding down the Nextel platform. At the end of the quarter we had approximately 1.3 million subscribers remaining, of which over 1 million were postpaid. We remain on track to shutdown the Nextel platform by the end of the second quarter. As a reminder, our operation to shut down plans for the platform will be similar to that of the [spinning] process we engaged in last year. The network will be shut down on June 30 at switch locations in rapid succession. Following the shutdown, we will begin powering down equipment and eliminating [T1s] at each cell site, which we expect to be substantially complete with 90 to 120 days.

 

We began the deployment of CDMA voice on 800 MHz in the first quarter and we expect to deploy LTE on 800 megahertz in the fourth quarter.

 

And we talked about Network Vision 2.0, I think there is a probably a couple of things out to think about. Number one, we didn’t initially contemplate 800 LTE when we were initially doing Network Vision and we got the standard band 26 into the standards last year. So this year we are going to actually put LTE in the 800 and help our inbuilding. So this is kind of one of the Network Vision 2.0. Additionally, and to an earlier question about the bands, for band 41, for 2.5 and being able to utilize and work with Clearwire. That was not initially contemplated in the Network Vision 1.0 in this way. And we will be, as Dan said, introducing devices this year that will be able to fall back from 2.5 to 800 to 1.9 and that’s required us to put them both the new standards in but also ECSFD for fallback. So those are just two of the things in the Network Vision 2.0 and there are others when I presume you guys come out and visit we can get into more detail about the specifics. But that’s what 2.0 is all about.

 

Not sure what ECSFD is off the top of my head, but all in all things sound like things are proceeding about as well as can be expected.

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Another quote of note from Hesse-san:

 

Assuming the transaction with Clearwire closes, we will begin deploying our first devices later this year, probably late third quarter that would have TD-LTE capabilities, multi band capabilities in those devices and of course it will take some time to put a lot of devices in our base. But we would begin that process this year.

 

Looks like I may be putting a cell phone on my Christmas list for myself. :)

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So based on what I've read in the quote above. Sprint (if clear wire is purchased I assume) would make 2.5ghz first priority, then 800, then 1900 for data???

 

I sure hope not. 2500->1900->800 should be the priority for LTE coverage. 800 MHz LTE resources are scarce and should only be used when the user is deep indoors especially if 800 MHz LTE is going to be deployed at every other tower.

 

I am more concerned about Sprint (post Clearwire purchase) that they deploy 2500 MHz TD-LTE in all major metropolitan areas including those that were left out in WiMax. LTE capacity offload is needed in every metro area and some major metro areas were left out in Wimax rollout. If Sprint's plan is to add TD-LTE to its own Network Vision towers then I feel more comfortable that these metro areas will be covered this time with TD-LTE.

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I sure hope not. 2500->1900->800 should be the priority for LTE coverage. 800 MHz LTE resources are scarce and should only be used when the user is deep indoors especially if 800 MHz LTE is going to be deployed at every other tower.

 

I am more concerned about Sprint (post Clearwire purchase) that they deploy 2500 MHz TD-LTE in all major metropolitan areas including those that were left out in WiMax. LTE capacity offload is needed in every metro area and some major metro areas were left out in Wimax rollout. If Sprint's plan is to add TD-LTE to its own Network Vision towers then I feel more comfortable that these metro areas will be covered this time with TD-LTE.

 

And I couldn't imagine it would be any other way. Also, this was a major selling point of the whole multi-mode base station approach.

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I sure hope not. 2500->1900->800 should be the priority for LTE coverage. 800 MHz LTE resources are scarce and should only be used when the user is deep indoors especially if 800 MHz LTE is going to be deployed at every other tower.

 

I am more concerned about Sprint (post Clearwire purchase) that they deploy 2500 MHz TD-LTE in all major metropolitan areas including those that were left out in WiMax. LTE capacity offload is needed in every metro area and some major metro areas were left out in Wimax rollout. If Sprint's plan is to add TD-LTE to its own Network Vision towers then I feel more comfortable that these metro areas will be covered this time with TD-LTE.

 

I think Sprint will focus on where they need the capacity first. I wouldn't expect to see BRS TD-LTE in Lansing, MI before NYC/LA/ATL/CHI/SF/BOS/DC/etc.

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I think Sprint will focus on where they need the capacity first. I wouldn't expect to see BRS TD-LTE in Lansing, MI before NYC/LA/ATL/CHI/SF/BOS/DC/etc.

 

Definitely. The major metros that you listed should be of focus for TD-LTE deployment but in my previous post, I was eluding that Sprint needs to include other major metro areas this time like San Diego, Phoenix, Detroit, New Orleans, etc that were left out in the WiMax rollout that are normally near the top of the list for any carrier.

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Interestingly, Sprint spent $1.7 billion on CapEx last quarter compared to VZW's $1.9x billion.

 

Given their relative sizes, if that doesn't show Sprint's commitment to their network, I don't know what does.

 

Ahhh... you finally found your way from Hofo! I agree but it's also not a orange to orange comparison considering that Verizon isn't completely replacing everything at a cell site for their deployment like sprint is. Still, it is nothing to scoff at either considering the amount of money Sprint is making and has compared to verizon with regards to the extent of the work needed to be done.

 

It'll be interesting to see how much Q2 spending will be with most, if not all, of sprints remaining markets beginning.

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