Wednesday, February 22, 2006

Sprint's Mixed Quarter

Unstrung reports Sprint Nextel's first full quarter as a merged company resultied in "a 55 percent drop compared to a year ago. It blames the high cost of last August's merger for the decreased profit." While the stock market reacted negatively, "industry analysts, however, generally describe the results as solid."

Roger Entner at Ovum said, "This was a good quarter... They added 2 million subscribers -- that's the same as Cingular. People need to learn to look at things in comparison."

According to the article, the separate Sprint and Nextel wireless brands "saw average revenue per user (ARPU) from customers that pay a monthly bill (postpaid) fall to $63 from $65 a year ago." As a separate company, "Nextel used to report an average ARPU of over $70 a month from its business-oriented customer base."

Entner thought the drop was an "indication of Sprint's efforts to sell to corporate customers and says it's a given that ARPU margins will get shaved." He said, "I think a lot of that has to do with enterprise. They cut prices for large deals."

Jack Gold at J.Gold Associates pointed out that Sprint's ARPU was "still riding high compared to some of its competitors." He said, "It's still reasonably high compared to Verizon's." A postpaid Verizon user pays nearly $50 a month for service on average.

Gold added, "They're still aggressively going after big corporate deals. The other thing they've got going for them is MVNOs. They got into this market early, and they've stayed competitive," says Gold.