Nextel still weighing on Sprint profits

Sprint continued to rack up new customers in the first quarter, but its recent acquisition of Nextel took a toll on the combined carrier’s bottom line.

Sprint added 1.3 million new customers through its wholesale and retail channels. Its acquisition of Nextel is expected add another 2.1 million customers to its subscriber base, and though it doesn’t effect its overall subscriber base, Sprint’s gobbling up of its PCS affiliates shifted 1.6 million customers to direct rather affiliate subscribers. When the Nextel deal closes this quarter, Sprint expects to have 51 million subscribers, a 7% increase in just three months.

Earnings, however, continued to suffer as it posted a net income of $417 million, 11% lower than the same quarter a year ago before it acquired Nextel. Sprint officials said that its estimated $1 billion in total merger related costs continue to drag down profits. Last quarter, merger costs ate up 38% of Sprint’s income.

The carrier’s revenues continue to climb as it adds new customers. Revenues rose to $11.55 billion last quarter, an increase of 66% over Sprint’s solo numbers last year and up 6% when Nextel’s numbers are factored in.