Sprint Nextel 2nd quarter results 2006 down

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Sprint Nextel shares were down sharply after the company reported a scant 708,000 net subscriber additions in the second quarter, most of which were prepaid customers. Sprint Nextel added just 210,000 postpaid subscribers in the quarter. The rest of the carrier’s subscribers came from prepaid division Boost Mobile.

The industry’s No. 3 carrier was also unable to get its churn down from 2.1 percent, where it has hovered for several quarters. Meanwhile, Boost churn increased to 6 percent, from 5.4 percent in the first quarter. The acquisition of Nextel Partners which closed during the second quarter, brought Sprint Nextel’s customer base up to 51.7 million subscribers.

Despite increasing demand for data services, the company’s average revenue per user dropped 6 percent compared with the second quarter of 2005, landing below $62; however, the carrier noted that about one-third of the ARPU decline “is attributable to the acquisition of affiliates.” Data revenue increased by almost 70 percent year-over-year, the company reported.

Sprint Nextel noted that “lower average monthly voice price plan revenues were partially offset by higher data revenues,” and that Boost’s ARPU dipped from $38 in the year-ago quarter to $34, based on lower pricing and lower average use.

Despite the results, Sprint Nextel reaffirmed its commitment to upgrading its network to CDMA2000 1x EV-DO Revision A. The carrier said it plans to cover approximately 40 million potential customers with the higher-speed technology by the end of this year, and have most of its network covered by the end of 2007. The technology upgrade will also enable Sprint Nextel to move ahead with the merger of its iDEN/CDMA walkie-talkie services using Qualcomm Inc.’s QChat technology.

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