Sprint Nextel Reports First Quarter 2012 Results
• Best ever Sprint platform postpaid ARPU increase of $4.03, or 6.9 percent, year-over-year drives Sprint platform wireless service revenue growth of 16 percent year-over-year
• Operating loss of $255 million; Adjusted OIBDA* of $1.2 billion, which includes $104 million in Network Vision related operating expense
• 263,000 postpaid net additions on the Sprint platform in the quarter – eighth consecutive quarter of postpaid subscriber growth on the Sprint platform
• Total company net additions of more than 1 million for the sixth consecutive quarter
• Strong iPhone sales of more than 1.5 million – 44 percent to new customers
• Network Vision deployment continues on track
o Continue to expect six major cities to launch 4G LTE by mid-year
o Continue to expect 12,000 sites on air by end of 2012
o To date work has begun on 25 percent of planned 2012 sites; 5 percent are on air
o Nearly 1,300 iDEN sites taken off air to date; expect 9,600 total by the end of the third quarter
• Wireless equipment net subsidy in the first quarter was approximately $1.6 billion (equipment revenue of $735 million, less cost of products of $2.3 billion), compared to approximately $1.1 billion in the year-ago period and approximately $1.7 billion in the fourth quarter of 2011. The quarterly year-over-year increase in net subsidy is primarily due to the launch of the iPhone, which on average carries a higher subsidy rate per handset as compared to other handsets. The sequential decline in net subsidy is primarily due to a decline in postpaid handset sales typical for the first quarter following the fourth quarter holiday sales activity.
• Wireless cost of service was flat sequentially, primarily due to lower 4G data costs, offset by higher Network Vision related expenses. Wireless cost of service increased approximately 12 percent year-over-year primarily due to higher 4G data costs, Network Vision related expenses, service and repair expenses and backhaul costs driven by higher data usage, partially offset by lower licenses and fees.
• Wireless SG&A expenses increased approximately 2 percent year-over-year and declined by approximately 1 percent sequentially. Quarterly year-over-year SG&A expenses increased primarily due to higher bad debt and selling expenses, partially offset by lower marketing costs. Sales expenses increased year-over-year primarily due to iPhone point-of- sale discounts (subsidy) for devices directly sold by the manufacturer to indirect dealers in which Sprint does not take device title, as well as higher postpaid gross additions. The impact from the iPhone was partially offset by improvements in sales channel mix with a larger portion of activations coming from direct retail channels. Bad debt expense increased year-over-year by $60 million driven primarily by an increase in the agings of accounts receivable outstanding combined with a higher average write-off per account. Sequentially, SG&A expenses decreased primarily as a result of lower sales and bad debt expenses, partially offset by seasonally higher marketing expense. Sequentially, bad debt expense declined $50 million due to a seasonal improvement in the agings of accounts receivable outstanding.