Sprint loss is less than estimated as data revenue grows

Sprint Nextel Corp., the third- largest U.S. wireless carrier, reported a smaller loss than estimated after smartphones helped increase customer spending on data plans and add to the size of phone bills.

The third-quarter net loss widened to 26 cents a share, compared with a 10 cent loss a year earlier, Overland Park, Kansas-based Sprint said today in a statement. Sales rose 5.2 percent to $8.76 billion. Analysts had predicted a loss of 43 cents a share and revenue of $8.81 billion on average, according to data compiled by Bloomberg.

Sprint has been losing money as it doles out smartphone subsidies and funnels money into an infrastructure-upgrade plan called Network Vision. It’s starting to see more of a payback from that spending because more customers are using their devices to surf the Web, run applications and watch videos -- boosting Sprint’s revenue from data plans. Still, sales missed projections and the number of monthly contract subscribers fell.

“This underscores how difficult it is to grow in a wireless industry that is saturated,” said Craig Moffett, an analyst with Sanford C. Bernstein & Co. who has a neutral rating on the stock.

Help is coming in the form of a new investor. Last week, Tokyo-based Softbank Corp. agreed to pay $20 billion for a 70 percent stake in the carrier. The deal would be the biggest publicly announced outbound acquisition by a Japanese company since at least 2000, according to data compiled by Bloomberg.

Stock Gains

Sprint shares rose as much as 1.8 percent in early trading after the results were announced. The stock has more than doubled this year, bolstered by the Softbank deal and a turnaround plan by Chief Executive Officer Dan Hesse that promises to make Sprint profitable by 2014.

The company sold 1.5 million iPhones in the period, putting it on track to satisfy a $15.5 billion purchase agreement with Apple Inc., Hesse said today on a conference call.

Last week’s deal with Softbank will give Sprint more financial backing for its network expansion while helping the Japanese company grow beyond its home market.

“One could argue that Softbank’s bid puts a bit of a floor under the stock,” said Scott Schermerhorn, who helps manage $550 million in assets, including Sprint shares, at Granite Investment Advisors Inc. in Concord, New Hampshire. “Softbank strengthens them in terms of liquidity, but as a shareholder with Sprint issuing more shares as part of the deal you will be diluted a bit.”

Sprint lost 456,000 subscribers last quarter, showing that the company’s comeback isn’t complete. It is shutting down its out-of-date Nextel network and trying to coax customers onto Sprint’s main service, contributing to subscriber churn. Still, the company benefited from average revenue per user growing 5 percent on Sprint’s network.

Bloomberg News

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