Sprint posts loss, lags in subscriber gains

Sprint Nextel continued to struggle as the third-biggest U.S. mobile operator in the first quarter, posting a loss and lagging behind the bigger AT&T and Verizon Wireless in adding subscribers.

The carrier lost $211 million or 7 cents per share, compared with a profit of $164 million or 5 cents per share in last year's first quarter. Revenue of $10.1 billion was up less than 1 percent year over year. Investments in network coverage and subsidies for handsets, among other things, cut into the results, spokesman James Fisher said. Sprint reiterated its forecast for the year, he said.

Sprint bought Nextel Communications in 2005, bringing together two networks that run on different technologies. Faced with strong rivals in a highly competitive market, Sprint Nextel is dealing with multiple challenges. The combined carrier has said it will maintain the iDEN system until at least 2012 but is taking steps to attract users to Sprint's CDMA network, which has been upgraded to the EvDO (evolution, data optimized) technology for 3G mobile data. Sprint Nextel could achieve a competitive coup by launching a WiMax wireless broadband network next year, but that project remains a gamble.

The company's Sprint CDMA network gained subscribers in the first quarter, but the iDEN network shed customers. The company overall gained almost 600,000 subscribers but recorded a net loss of 220,000 in post-paid customers, who tend to be more lucrative for carriers than prepaid users.

While Sprint's subscriber rolls grew 10 percent from a year earlier, to 53.6 million, its larger competitors grew faster: Verizon Wireless gained 14.5 percent to 60.7 million and AT&T's Cingular wireless business, the nation's biggest, grew 11.2 percent to 62.2 million.

However, Sprint is seeing strong growth in its wireless data services. Revenue from that source rose 44 percent from a year earlier to almost $1.2 billion. Mobile operators are looking to these services, such as messaging, e-mail, and entertainment, as their next cash cow and to offset falling voice revenue. For Sprint overall, data made up 16 percent of average revenue per post-paid user. For the CDMA network, that figure was 20 percent. Last month, AT&T reported its data revenue had risen 66.8 percent and Verizon reported an 80 percent increase.

Sprint's shares (S) on the New York Stock Exchange were up 68 cents to $20.69 on Wednesday afternoon.