Sprint wireless growth slows, but profit up

Sprint's wireless unit took on new subscribers at a slower-than-expected rate during the second quarter, but overall the company saw wireless revenue and overall corporate profit rise during the quarter, Sprint officials said during the company's second quarter earnings call.

New wireless subscriber additions for the second quarter amounted to 588,000, far fewer than the 1.3 million added during the first quarter of this year, and less than the 897,000 recorded for the same quarter last year. However, Len Lauer, president and chief operating officer at Sprint, attributed the lower number somewhat to second quarter traditionally being a slow season for new wireless sign-ups, including slower additions through the company's Virgin Mobile USA MVNO joint venture.

Breaking down the new subscriber additions, about 87,000 came through Sprint's growing wholesale MVNO effort, which most recently gained MVNO juggernaut Disney as a customer. "We continue to be very encouraged by the growth in our MVNO operation," Lauer said, adding that two other MVNO resellers--ESPN and Movida--are still due to launch in the coming months. About 101,000 new wireless customers came through Sprint wireless affiliates. Sprint recent acquired one of those affiliates--U.S. Unwired--after that company had alleged that Sprint's pending merger with Nextel Communications would hurt Sprint affiliates competitively.

Lauer said he expects wireless subscriber additions to bounce back during the second half of this year as a result of upcoming promotions and MVNO launches. The carrier now has 26.6 million wireless customers. Wireless average revenue per user during the quarter was $62, and churn was 2.2%. Sprint now also has 8.1 million wireless data customers, and data is contributing $6.50 to ARPU, Lauer said.

Bob Dellinger, executive vice president and chief financial officer at Sprint, said despite lower subscriber gains, the wireless unit still posted revenue of $4.04 billion in the second quarter, up 12%. He said that figure represented 56% of total corporate revenue for the quarter, which was $7.1 billion. Overall, the revenue helped profit for the quarter to post at $599 million, or earnings of about 40 cents per share. That figure also far surpassed earnings of $229 million for the second quarter last year.

"The growth in wireless continued to more than offset the decline in wireline," Dellinger said. The company's long-distance revenue was $1.7 billion for the quarter, down 8%, and local service revenue was $1.48 billion, down 2%. Local access line were down 3.2% to about 7.5 million total access lines.