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5/12/2008
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Sprint Nextel Loses 1 Million Customers Amid Falling Revenue, Profit

Sprint Nextel has 52.8 million subscribers left, and the company predicted the subscriber losses will continue in the current quarter.

The string of bad news from Sprint Nextel continued Monday as the mobile phone service provider reported falling subscriber rolls, profits, and revenue for its first quarter.

The third-largest U.S. wireless provider lost more than 1 million of its best customers, the ones with monthly contracts, the company reported. Sprint Nextel's total subscriber list now totals 52.8 million, and the company predicted the subscriber losses will continue in the current quarter.

The company has been reeling since its acquisition of Nextel in 2005; in recent days and weeks Sprint Nextel has been moving to reorganize. Last week it announced it would provide valuable spectrum for a 4G WiMax partnership it will lead with Clearwire, Intel, Google, and Cablevision. Sprint will own 51% of the new partnership, which will do business as Clearwire.

At the same time, there have been numerous reports that Sprint is attempting to sell the Nextel unit -- it has already written off some $30 billion of the $35 billion Nextel acquisition price. And Sprint itself hasn't been immune from the rumors -- there have been reports that Deutsche Telekom may be interested in acquiring Sprint.

Chief executive Daniel Hesse, who took over the top post late last year, has been aggressively acting to stabilize Sprint Nextel and its finances, laying off thousands of employees, beefing up customer service, and announcing improved handsets and service plans.

In a statement, Hesse said: "We have strengthened our hand with last week's 4G announcement, which captures and leverages the value of Sprint's sizable spectrum holdings, provides Sprint with additional financial flexibility, gives us a time-to-market advantage over our competitors in the important growth area of wireless broadband, and allows Sprint management to focus our resources and attention on improving the performance of our core business."

By turning over the management of the 4G WiMax operations to Clearwire, Sprint will be able to concentrate on improving its nationwide 3G CDMA EV-DO network. Hesse said the company's new actions should lead to improved profitability in the long term.

In its first-quarter report, Sprint Nextel reported a net loss of $505 million, although the company would have posted a small profit after excluding one-time costs. Revenue dropped to $9.33 billion from $10.09 billion.

"We are making progress in methodically attacking the sources of our performance issues," said Hesse.

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