Sprint shows improvement, but can it turn around fast enough?

Sprint may still be hemorrhaging subscribers, fighting churn, cutting capital spending and losing margins, but it could be worse. The third-largest carrier’s fourth-quarter earnings, which included a loss of 1.3 million subscribers, contained a few reasons to believe the carrier could turn the corner. As Bernstein Research senior analyst Craig Moffett pointed out, although only customer service levels and network reliability actually improved, churn, gross margins and gross addition share at least stopped getting worse.

“Unfortunately, there is little sign – yet – that things are actually getting better,” Moffett added in a research note. Chief executive officer Dan Hesse, too, stressed the good news that losses have stabilized, but at a time when the rest of the industry is growing by about 7%, stabilization might not be good enough. Sprint reported net customer losses of 1.3 million in the third quarter. Postpaid subs declined 1.1 million, bringing the total decline in the past five quarters to more than 5 million and Sprint’s total subscriber base to 49.3 million. Sprint trails its two largest competitors, Verizon and AT&T, which respectively captured 80 million customers and 77 million customers in the fourth quarter, but came out ahead of T-Mobile, which finished the quarter with 33 million subs.

Hesse focused on Sprint’s customer-retention strategies in its third-quarter earnings report, a theme he continued into the fourth quarter. While churn was actually up slightly from 2.15% in the third quarter to 2.16%, it was down from 2.29% from a year prior, making Sprint the only major carrier that achieved year-over-year churn improvement. Hesse said his top three priorities for 2009 are improving the customer experience, strengthening the brand and improving profitability.

“The improvements we’ve made in the customer experience are the basis for driving further improvement in the perception of our brand,” Hesse said today on Sprint’s earnings call. The carrier will continue to stress value, simplicity and productivity as the staples of the brand. Sprint is also hoping to win customers and revive its struggling Nextel iDEN network through its prepaid arm Boost Mobile’s $50 unlimited prepaid plan.

Following already massive customer losses, Sprint announced plans to eliminate 8,000 jobs last month, its third consecutive January with job cuts. The carrier cut 11 call centers, but Hesse said its customer satisfaction rankings have improved. Sprint ranked first in call response for the second straight quarter by answering 90% of calls in 30 seconds or less. It is also now second place in service and repair satisfaction, passing two national competitors and showing the most improvement of any carrier in 2008, Hesse said.