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4/28/2010
01:23 PM
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Sprint Nextel Reports $865 Million Loss

Prepaid signups held strong in the first quarter as the company held out hope that its nationwide 4G network will return it to profitability.

Subscriber and profit losses continued in Sprint Nextel's first quarter as the firm prepared to launch an innovative handset and a nationwide 4G network that it hopes will return it to its former glory and profits.

The company said it lost $865 million on revenue of $8.1 billion. Sprint Nextel said it lost a total of 75,000 net subscribers in the quarter, but noted that some parts of its subscriber population -- particularly prepaid signups -- performed well.

The Nextel operation continued to be an albatross around Sprint's neck. Already writing off $30 billion on its Nextel acquisition, Sprint said its Nextel iDEN network lost nearly 447,000 customers. Sprint's CDMA network lost 131,000 post-paid customers. After failing to sell the iDEN network, Sprint hunkered down and repositioned it as a prepaid network.

Sprint Nextel CEO Dan Hesse put a brave face on the mixed results saying in a statement, "Sprint's first-quarter results, including increased net operating revenues and significant year-over-year net post-paid subscriber improvements, show we continue to make progress in improving the business."

Sprint has not been alone in the loss of valued post-paid subscribers as AT&T and Verizon Wireless, too, recently reported slowing signups of post-paid consumers.

Sprint may be betting the store on the success of its 4G network and its majority ownership of Clearwire, which is rolling out a nationwide WiMax high-speed network. The deployment of the network appears to be accelerating, as Sprint said its 4G service currently serves nearly 40 million people and coverage is expected to reach as many as 120 million people by the end of the year. Sprint noted that the 4G service was rolled out in Houston in the first quarter while new deployments are scheduled for Boston, New York, San Francisco, Kansas City, and Washington DC.

An HTC handset called the Evo has been manufactured for the network, although Sprint hasn't yet announced a formal release date. The handset has impressive specs, including a 4.3-inch transistor LCD screen. The device can operate on Sprint's existing 3G CDMA EV-DO network as well as Clearwire's WiMax network.

While Sprint currently has the most 4G network pieces in place, a nationwide LTE network operated by Verizon Wireless is expected to be unveiled any month now. To date, Verizon hasn't revealed any handsets for the 4G network but several mobile phone providers have been working on devices for it.

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