Sprint’s road to recovery is finally seeing some significant progress thanks to a boost from Android and growth in the number of prepaid subscribers. The third-place carrier added 644,000 new subscribers in the third quarter ending Sept. 30, its best result since 2006.
The carrier is enjoying growth in its Sprint postpaid business (those who sign a contract) as new subscribers check out the carriers’ growing selection of Android phones, particularly its 4G-enabled Evo and Epic smartphones. The interest in the Android devices has helped Sprint reduce its postpaid churn to its lowest third-quarter record ever, while helping reduce its overall postpaid subscriber loss. For the second consecutive quarter, more customers switched to Sprint than fled to competitors.
Sprint has staked a lot of its turnaround on the strength of its Android portfolio and has played up the fact that it offers two 4G phones in the Evo and Epic. Earlier this month, the carrier also unveiled Sprint ID: app packs for Android phones that allow customers to customize their app experience.
Sprint is also experiencing real growth in its prepaid business, which it bolstered last year with the purchase of Virgin Mobile, adding it to a stable of other brands, including Boost Mobile. Sprint added 471,000 prepaid customers, bringing its total of prepaid users up to 11.6 million, an increase of almost a million subscribers since the Virgin Mobile acquisition closed in the fourth quarter last year.
The carrier, however, is struggling with its iDEN business, which continues to weigh the company down. Sprint lost 383,000 customers during the quarter on its iDEN network acquired in 2005, and with no end in sight, it puts even more pressure on Sprint to migrate customers off the old Nextel network.
Overall, Sprint’s loss widened to $911 million or 30 cents a share, up from $478 million in the same quarter last year. Revenue, meanwhile, rose 1.4 percent to $8.15 billion. Sprint is also struggling to wring new revenue from users. Average revenue per user for postpaid subscribers was $55, off slightly from $56 a year earlier, though flat sequentially. Prepaid ARPU came in at $28, the same as the second quarter, but down from $35 a year ago.
Sprint said it expects net subscriber growth for postpaid and prepaid in the fourth quarter of 2010. With 4G rollouts in San Francisco, New York and Los Angeles underway, the new network should help Sprint move more Evo and Epic smartphones. But with Verizon’s LTE network launching this year, and LTE handsets expected by next year, Sprint will need to press its 4G advantage as much as it can. That’s why Sprint needs a solid prepaid business. 4G may take a while to make a difference, but cheap prepaid plans have plenty of appeal now. It’s still an uphill battle for Sprint against Verizon Wireless and AT&T, which are still adding subscribers at a faster rate, but Sprint is showing it still has some fight.
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