Sprint PCS narrows loss, shows disappointing sub growth

Sprint PCS received a considerable market boost today after it eased investors’ concerns about its second-quarter results. Sprint reported poor subscriber growth but offset the bad news with higher revenues per customer and lower churn rates, allowing the CDMA carrier to keep its numbers in line with its forecast last month.

Investors expecting Sprint PCS to fail to meet even its revised guidance, sent Sprint shares as low as $5 over the last four weeks, but today’s news gave the company’s stock a 20% boost, moving it as high as $5.95 by midday. While Sprint didn’t meet analysts’ expectations of a 7 cents per share loss, it did narrow its loss from last year. It closed the gap to 17 cents a share as opposed to the 26-cent loss it incurred in the second quarter last year.

Most damaging to Sprint PCS, however, may be its fall from the grace among the fastest growing carriers in the U.S. For the first time in 15 straight quarters, Sprint failed to add the most subscribers of any other carrier. Nextel, which reported Tuesday, added 471,000 customers, far surpassing the much larger Sprint’s 308,000 new subs.

Despite the disappointing results, Sprint still believes it can meet its stated goal of 2.5 million to 2.7 million new subscribers for the year. Sprint expects a big boost in sales when it launches its 3G cdma2000 networks this fall.

“I don’t think necessarily everybody will run out and buy 3G phones because they immediately want to use large amounts of data capacity, but the excitement created from 3G will drive people into our stores to see what Sprint has to offer,” said Chuck Levine, president of Sprint PCS.

The quarter will be a busy one for the carrier. Earlier this month, Virgin Mobile USA launched, reselling Sprint’s network minutes in specially geared service plans, marketed specifically at youth. Sprint has a 50-50 revenue sharing agreement with Virgin, and even though Virgin will be offering services in all of Sprint’s markets, Levine said he doesn’t anticipate Virgin will eat into Sprint’s customer base.