Sprint Loses Customers But Gets a Reprieve on Debt

[qi:083] Unlike the many consumers facing unsympathetic lenders, when you’re a money-losing telecommunications firm with a $9.39 billion market cap, you can still renegotiate your debt. Today, after reporting a third-quarter loss of $326 million and the defection of 1.3 million customers, Sprint said it had done just that. Under the terms of its new credit facility, the troubled telecom has less money available to it, but has the ability to take on a greater debt load relative to its earnings without breaking its loan covenants and risking a technical default.

The renegotiated debt gives Sprint some breathing room while it tries to stem the loss of its customers. Of those that left the carrier in the most recent quarter, 1.1 million were high-value, post-paid customers that pay monthly as part of a contract with the carrier. Sprint also said it expected¬†“continued pressure on post-paid subscribers” in the fourth quarter — a sign that could doom its turnaround efforts.

When it reported second-quarter results in August, Sprint said it expected customer defections to ease in the last few months of 2008. They appear to be accelerating. In the first quarter, the company lost 1.1 million subscribers, 1.07 million of whom were post-paid. During the second quarter, Sprint lost another 901,000 subscribers, 776,000 of whom were post-paid. Renegotiating debt will help, but Sprint has to figure out how to keep its customers on board.

loading

Comments have been disabled for this post