Sprint Nextel Weak 2006 4th quarter

[Barry]

Sprint Nextel announced weak fourth quarter customer metrics and said that network and business investments would likely affect its financial performance in 2007. One of the keys is the continued loss of IDEN subscribers. The carrier also plans to cut its workforce by 5,000 positions to fewer than 60,000 employees, as it unifies various business and customer care systems.

Sprint reported 742,000 net customer additions during the fourth quarter. That number reflected a loss of 306,000 postpaid subscribers for the period, widening from a third quarter postpaid customer loss of 188,000 subscribers.

Sprint saw the strongest growth through its wholesale business and remaining affiliates, posting 876,000 net additions. The Boost Mobile L.L.C. sub-brand gained 171,000 net new subscribers, a relatively poor performance compared with previous quarters and likely a result of the company’s stated aim to dial back on Boost because of iDEN spectrum capacity issues in areas where it is going through a rebanding process.

The company blamed credit tightening in the second half of the year for impacting customer growth in the fourth quarter, but also said that the restrictions had improved the credit mix of fourth-quarter acquisitions. Fourth quarter churn showed slight sequential improvement, dropping from 2.4 percent in the third quarter to 2.3 percent.

The elimination of 5,000 jobs is the result of unifying customer care, device activation, billing and financial systems, Sprint Nextel said; most of the cuts will take place in the first quarter of 2007.

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