Well, perhaps ‘sprints’ is a bit too strong but it has been such a long time in coming… Sprint Nextel (NYSE:S, news, filings) finally returned to sequential revenue growth in the its earnings report for the first quarter of 2010. Revenues of $8.085B were up 3% sequentially and a bit better than the consensus estimates. Loss per share was also a bit better than expected at $0.17 not including a $0.12 non-cash charge related to valuation of deferred tax assets. The pain still isn’t over at Sprint, but perhaps they have finally turned the corner they have been promising us they would turn.
On the wireless side, the company added 348,000 pre-paid customers plus another 155,000 wholesale and affiliate customers, while losing 578,000 post-paid customers. That’s a net loss of just 75K, which may be a far cry from the increases being put up by AT&T and Verizon but is an improvement nonetheless. Sprint forecasts that both post paid and total subscriber losses will be better in 2010 than 2009, which isn’t quite as good as saying subscribers will actually start rising again – but investors will take what they can get.
The company’s wireline business continued on the same trajectory it has been on. Revenues declined by the usual 2.1% sequentially to $1.297B. EBITDA rose sequentially to $279M for the quarter, returning EBITDA margins to just under 22%. Capex was just $56M, or just 4.3% of revenues, as the company continues to manage this segment for cash flow rather than expansion.
What exactly the company will do with its wireline business remains an open question. They aren’t investing capex in it, and we know they considered various strategic alternatives last summer when the credit markets were uncooperative. Now that CenturyTel and Qwest are getting hitched, the field of potential suitors/partners has narrowed. It’s probably just a matter of time before another Level 3 joint venture rumor hits the streets IMHO.
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Categories: Financials · Internet Backbones · Wireless
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with TWC going away and now probably Embarq, anyone able to venture a guess on what revs and ebitda are in wireline now.
Cynically, you wonder at that rate of attrition(which Sprint mgmt seems to not want to ameliorate) is there anything to JV or would be it the acquisition of what’s left be worth doing at all? Acquiring companies that are operationally deteriorating is usually a way to guarantee poor results in M&A. With a network being the victim of severe malnutrition and a customer base that’s eroding at an accelerated pace – why would anyone bid for an asset that is just donating share to the market.