* Q3 adj loss $0.19 vs Wall St view $0.15 loss
* Q3 postpaid losses 801,000, fewer than expected
* Q3 rev $8.04 billion vs Wall St view $8.09 bln
* Shares down 5 percent in afternoon trade
(Updates share price move, adds analyst comment)
By Paul Thomasch and Sinead Carew
NEW YORK, Oct 29 Sprint Nextel Corp (S.N)
reported a wider quarterly loss and a revenue decline on
Thursday, and raised concerns that future results would be hurt
by its costly efforts to slow subscriber losses.
At the heart of Sprint's struggles is the loss of postpaid
monthly-bill-paying subscribers, the most lucrative subscribers
in the mobile business. That dwindling subscriber base has put
Sprint further behind rivals Verizon Wireless and AT&T Inc
(T.N) in the wireless wars.
Shares of Sprint, the No. 3 U.S. mobile service, fell 5
percent after the report, which showed a loss of 801,000
While significant, the subscriber loss figure was not as
bad as many analysts had feared. It also marked an improvement
from declines of 991,000 in the second quarter and 1.25 million
in the first quarter.
"They still have an extremely long way to turn around the
business and generate positive post-paid subscriber growth,"
said Soleil/Nelson Alpha Research analyst Michael Nelson.
"Clearly, a loss of 800,000 a quarter isn't going to cut
it, but it does show some sign of improvement and says they are
at least heading in the right direction."
The results are a far cry from the numbers put out by AT&T
and Verizon Wireless, a venture of Verizon Communications Inc
(VZ.N) and Vodafone Group Plc (VOD.L). Between them, AT&T and
Verizon Wireless added more than 3 million subscribers in the
But Sprint Chief Executive Dan Hesse called the sequential
improvement the best in more than five years, and said he
expected a smaller postpaid subscriber loss again in the fourth
quarter. Hesse expects improving subscriber trends in 2010.
The trouble is that Hesse is banking on the sale of
attractive phones like Palm Inc's PALM.O Pre and HTC Corp's
(2498.TW) Hero -- but that comes at a cost.
Carriers often shoulder much of the expense of advanced
devices so that they can price them attractively for retail
sale, which can draw subscribers but which also increases
costs. Sprint's quarterly equipment subsidies, for instance,
rose to $950 million from $700 million a year before.
"Right now Sprint is having a difficult time balancing
subscriber growth with profitability," said Nelson, who along
with other analysts, cut his 2010 earnings before interest,
taxes, depreciation and amortization, or EBITDA, estimate for
Sprint's third-quarter loss widened to $478 million, or 17
cents a share, from $326 million, or 11 cents a share, a year
earlier. Revenue fell 9 percent to $8.04 billion.
Excluding items, it posted a loss of 19 cents a share,
according to Thomson Reuters I/B/E/S, compared with analyst
estimates of a loss of 15 cents per share. Analysts had
expected revenue of $8.09 billion.
While losing monthly-bill-paying wireless customers, Sprint
fared well with prepaid customers, adding some 666,000 of them
in the quarter due to Boost Mobile, a service that allows for
unlimited calls and texting at a set monthly fee.
Still, investors worry that Sprint could be overly
dependent on growth from prepaid, a business that tends to be
less profitable and less predictable than postpaid. Some also
worry the market will pull back once the economy improves.
"Part but not all of it has been driven by economic
factors," Sprint's Hesse said in an interview. But he added:
"It's clearly here to stay. I don't think we'll ever go back to
where prepaid was a year ago."
Shares of Sprint were down 17 cents to $3.07 on the New
York Stock Exchange late in the session, after dropping as low
(Reporting by Paul Thomasch; Editing by Gerald E. McCormick
and Derek Caney)