Sprint posts loss, plans WiMax for Boost and Virgin

The carrier sold 1.5 million iPhones in the first quarter and says the Apple device pulled in new subscribers

Sprint Nextel will start offering 4G WiMax service to its Boost Mobile and Virgin Mobile prepaid customers later this quarter, CEO Dan Hesse said Wednesday after the company reported a net loss for the first quarter.

Sprint said it is on track to start offering LTE (Long-Term Evolution) service under its own brand in the middle of this year and plans to migrate its subscribers away from WiMax over the next few years. But customers of its budget Boost and Virgin brands still rely on the company's 3G EVDO network, which falls short of both types of 4G service, so WiMax will give them a significant speed boost. Hesse said more details of the WiMax offering will come later.

The nation's third-largest mobile operator deepened its loss for the first quarter, at $0.29 per share, compared with $0.15 per share in last year's first quarter. But the loss was smaller than analysts polled by Thomson Financial had expected in an average forecast of $0.41. The company said its wireless service revenue grew 7 percent, driven by higher average spending by customers of its Sprint brand. The cancellation of its spectrum-hosting deal with would-be hybrid mobile operator LightSquared provided a one-time $170 million net benefit.

The Apple iPhone, which Sprint first offered in the fourth quarter of last year, brought new customers to Sprint, the company said. It sold more than 1.5 million iPhones in the quarter, and 44 percent of them were to new customers. The company's iPhone sales were down from 1.8 million in the previous quarter, when the popular handset debuted on Sprint.

The company's total subscriber base grew by about 4 percent from the fourth quarter, counting both postpaid and prepaid customers, to reach 56.1 million. Sprint remains dwarfed by AT&T and Verizon Wireless, with 103.9 million and 93 million subscribers, respectively. Its main competitive angle remains its unlimited data plans for smartphones, which its bigger rivals don't offer. Sprint plans to continue offering unlimited data on all its smartphones, including the next iPhone even if it has LTE, the company confirmed on Wednesday.

Its network-building plans are on schedule, with LTE due to launch in six cities by the middle of this year: Houston, Dallas, San Antonio, Atlanta, Kansas City and Baltimore. The buildout of its national Network Vision infrastructure, which will carry the LTE and other services on flexible base stations, is also on track, Sprint said. Meanwhile, the company continues to reduce the capacity of its Nextel iDEN network, which is slated to be shut down next year, and is reallocating 800MHz spectrum from that system to other services.

Sprint relies on partner Clearwire for use of its WiMax network. It has long-term pricing commitments from Clearwire through 2014 and can keep using the WiMax network through at least 2015.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

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Stephen Lawson

IDG News Service
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