With the company busy spending to build out LTE, expectations for Sprint Nextel (NYSE:S, news, filings) to beat estimates in the first quarter weren't high, but that's what they did this morning. Revenues of $8.73B were slightly higher than expected, while the net loss per share of $0.29 easily better than the composite analyst guess of $0.41. The markets seem to like the results, as the stock is up 5% in the premarket.
Most of the attention is always on the wireless business of course, and on that front Sprint sold 1.5M iPhones, 44% of which were to new customers. That was enough to keep total net wireless subscriber adds above 1M for the quarter. They also saw an increase in retention for those upgrading from the Nextel platform, reaching 46%. That no doubt reflects the availability of the iPhone as an upgrade option.
But it's actually the progress of their Network Vision project that many will be watching. Sprint says they've begun work on 25% of the sites they plan to upgrade this year, and they're on track to launch LTE in six major cities this summer. Meanwhile, they've taken 1,300 iDEN sites off the air, with another 9,600 to follow in the next two quarters. They spent $104M in opex on the project, as well as $315 in capex.
On the wireline front, revenues finally dipped below the $1B mark for the first quarter, sinking to $998M. Adjusted OIBDA fell to $161M, yielding adjusted OIBDA margins of just 16.1% - another step downward. According to the company, most of the revenue decline came from reduced intercompany rates charged to the wireless side. Capex of $45M was actually an uptick, representing 4.5% of revenue - still as low as it gets in the sector of course.
Hmmm, that sounds like something they might do to put things in place for a sale of the wireline assets - a possibility for which there have long been rumors but no action. Might this finally fall into place in the second half? Either CenturyLink or Level 3 might be ready by then, and there remains a solid reason for Sprint to monetize it sooner rather than later as margins continue to drop.
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