* Total net subs losses of 243,000 beat analyst view 292,000
* Sprint brand subscriber numbers miss some analyst
* 4th-qtr revenue $9 bln vs Wall Street estimate of $8.92
* No update provided on potential Clearwire acquisition
* Shares fall 1.2 pct on NYSE
By Sinead Carew
NEW YORK, Feb 7 Sprint Nextel Corp, which
is seeking to sell 70 percent of itself to Japan's SoftBank Corp
, posted higher fourth-quarter revenue on Thursday, but
its subscriber numbers fell short of some Wall Street estimates.
Overall, the No. 3 U.S. mobile service provider reported
smaller-than-expected subscriber losses, but analysts were
disappointed with the growth of its Sprint network. It is
shutting its Nextel network by the end of June.
It added 401,000 Sprint customers in the quarter, including
333,000 that moved from Nextel. That left analysts concerned
that it had to depend so heavily on Nextel customers.
"I would rather they grow the Sprint business faster than
they did and shut down the Nextel business faster," said Hudson
Square Research analyst Todd Rethemeier, who had expected the
company to add 600,000 Sprint customers in the quarter.
Sprint Chief Executive Dan Hesse told analysts on a
conference call he was unhappy with the 1.98 percent churn rate
in the fourth quarter, a measure of customer defections. It was
higher than the third-quarter rate.
Hesse blamed the increase on a massive network upgrade
project that caused some customers to turn away, including an
entire company that hung up on Sprint services at the same time
Sprint was moving its users from the Nextel network.
But Hesse said the numbers should improve after the
shuttering of the Nextel network and Sprint made more progress
in its network upgrade and had more success selling tablet
computers such as Apple's iPad.
"We think we'll have good numbers on the Sprint side in the
second half of the year," Hesse told Reuters in an interview.
Sprint's bigger rivals have reported strong growth from
connecting devices such as tablets to their network via data
share plans that allow customers to add several devices to their
monthly smartphone data allowance.
But Hesse said that he is not contemplating moving to data
share plans at this point.
Hesse said that Sprint will emerge as a more competitive
company after the planned closing at midyear of the $20 billion
deal with SoftBank, a highly successful competitor in Japan.
NO CLEARWIRE NEWS
On top of its SoftBank deal, Sprint is looking to buy out
Clearwire Corp for $2.97 per share. Sprint, which is
the majority owner of the mobile broadband network operator,
needs approval from a majority of Clearwire's minority
shareholders and is facing potential obstacles.
The minority shareholders have complained about the deal's
price, and satellite television operator Dish Network Corp
countered with an offer of $3.30 per share last month.
While Clearwire recommended the Sprint deal to shareholders
in a proxy filing last week, it said that it is still reviewing
the Dish offer.
"It is their duty to try to get the best they can for their
shareholders," said Hesse, who pointed to the recommendation in
the proxy when asked if he might raise Sprint's bid. "Both
Clearwire and Sprint are working to get our transaction
CHURN NEEDS TO IMPROVE
Sprint posted a net loss of 243,000 subscribers in the
quarter, which was better than the average estimate of a loss of
292,000 from five analysts contacted by Reuters.
By comparison, bigger rival AT&T Inc added 780,000
subscribers in the quarter and market leader Verizon Wireless
added 2.1 million net subscribers.
However, Sprint said the Apple Inc iPhone helped
win new customers. Of the 2.2 million iPhones it sold in the
quarter, 38 percent were to customers who were new to Sprint.
Sprint said on the conference call that it would be hit by a
net loss of roughly 1.3 million to 1.4 million prepaid customers
in the second quarter because of a regulatory change related to
customers who receive a government subsidy for some cellphone
The change will contribute to net customer losses of 500,000
to 600,000 in the first half of 2013 at wholesale customers that
rent space on Sprint's network.
Sprint, which is spending heavily to upgrade its network,
forecast 2013 adjusted operating income before depreciation and
amortization (OIBDA) of $5.2 billion to $5.5 billion.
Guggenheim Securities analyst Shing Yin said the outlook
"is probably conservative" as he believes that Sprint may end up
posting higher 2013 OIBDA.
Sprint reported a wireless service margin of 9.3 percent
based on adjusted OIBDA, slightly below the 9.6 percent expected
by the five analysts contacted by Reuters.
Yin said he was pleased that the number was not as bad as
some investors had feared since margins also declined at Verizon
Wireless and AT&T.
"That's encouraging because after AT&T and Verizon's report
last month there was some fear we'd see a negative margin
surprise at Sprint," he said.
Sprint posted a quarterly loss of $1.32 billion, or 44 cents
per share, compared with a loss of $1.30 billion, or 43 cents
per share, in the year-ago quarter. Revenue rose to $9.01
billion from $8.72 billion. Wall Street expected $8.92 billion,
according to Thomson Reuters I/B/E/S.
Sprint shares were down 7 cents, or 1.2 percent, to $5.70 in
early afternoon trade on the New York Stock Exchange.