Wireless Data Helps to Boost Sprint’s 1Q

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Sprint Nextel Corp. took a fairly big hit on earnings related to the $35 billion acquisition of Nextel Communications, but it also saw healthy increases in revenue and wireless-data usage.

The Overland Park, Kan.-based telecommunications and wireless provider also maintained that its joint venture with Time Warner Cable, Comcast Corp., Cox Communications Inc. and Advance/Newhouse Communications is on track, with plans to roll out the first co-branded wireless services in seven markets by the end of the year.

For the quarter, Sprint Nextel pulled in consolidated revenue of $11.5 billion, a 66% increase compared with the $6.94 billion posted in the first quarter of last year, but the 2005 numbers don’t reflect revenue from Nextel.

Operating income, meanwhile, dropped to $863 million, down from $1.04 billion in the year-ago period.

Earnings per share totaled 14 cents, down from 31 cents in the prior-year quarter. That reflects the fact that the 2005 figures also don’t reflect the addition of Nextel, but it also resulted from charges taken to close out the Nextel acquisition.

Sprint Nextel’s business focus these days is wireless, and there, it added 1.3 million subscribers, including 502,000 additions to its youth-oriented “Boost Mobile” service and 273,000 through wholesale channels including mobile-virtual-network operators such as Mobile ESPN. It now claims 48.9 million wireless subscribers.

Wireless post-paid average revenue per user was $62 -- higher than other major carriers but a 3% drop compared with last year. Wireless data ARPU came in at 11% of total revenue per customer, the highest among major wireless carriers.

That includes growth in Sprint Nextel’s “Power Vision” broadband-video service, which now has 750,000 subscribers -- a major increase compared with the 250,000 who signed on for the service by the end of the fourth quarter.

On the wireline side, Sprint Nextel’s local digital-subscriber-line service attracted 84,000 customers, an all-time high. Sprint Nextel’s consumer voice revenues continued to decline, ironically as customers often switch to voice-over-Internet-protocol services offered by cable companies.

Nevertheless, “by being aligned with the leading cable companies, we’re well-positioned strategically regarding these natural trends,” chief operating officer Len Lauer said.

At the end of the first quarter, Sprint Nextel saw voice traffic from approximately 1 million cable-telephony subscribers, up from the 860,000 customers active in the fourth quarter. Wholesale revenue for Sprint Nextel totaled $150 million.

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