UPDATE 4-Sprint posts huge loss, scraps dividends

(Adds WiMax, credit ratings)

By Sinead Carew

NEW YORK, Feb 28 (Reuters) - Sprint Nextel Corp (S.N: Quote, Profile, Research, Stock Buzz) posted a $29.45 billion quarterly loss on Thursday due to a huge goodwill write-off and forecast deepening customer losses, sending its stock down as much as 13 percent to a five-year low.

The No. 3 U.S. mobile service said it would stop paying dividends for the foreseeable future, and Chief Executive Dan Hesse said it would take many quarters to turn the company around and rebuild its brand.

"To be frank, the issues we face are more difficult than what I expected to find," Hesse told analysts on a conference call. "It takes hard work and time to regain a reputation." Hesse replaced Gary Forsee as CEO in December.

Sprint has been losing ground to rivals amid network and customer service problems. Analysts had expected a weak fourth quarter performance, but they were hoping for a clearer plan from Sprint to turn the business around.

Instead, Sprint forecast subscriber losses that will be "considerably worse than even the most bearish estimates out there," said Stanford Group analyst Michael Nelson.

In the current quarter Sprint expects to lose 1.2 million customers who pay monthly bills, compared with 683,000 such losses in the fourth quarter and Nelson's estimates for a first-quarter loss of 400,000. Sprint said it does not expect any improvement to subscriber losses in the second quarter.

Smaller rival T-Mobile USA, owned by Deutsche Telekom (DTEGn.DE: Quote, Profile, Research, Stock Buzz), on Thursday reported a gain of 951,000 total net new customers in the fourth quarter.