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Sprint(s s) uttered a familiar refrain on Wednesday during its quarterly earnings call: The dust kicked up by Sprint’s ongoing network overhaul is causing more customers to flee, but everything will get better once its seemingly endless network upgrade is complete.
Sprint shed 334,000 mobile connections in the second quarter – Sprint’s fiscal first quarter – but if it wasn’t for its booming wholesale business those losses would have been far greater. About 530,000 subscribers joined Sprint’s networks thanks to partnerships with mobile virtual network operators like FreedomPop, Republic Wireless and Ting, who resell Sprint’s network capacity under their own brands.
Sprint recorded a net loss of 245,000 postpaid customers last quarter, and most surprisingly the loss of its prepaid subscribers continued to mount. Sprint suffered from 619,000 prepaid subscriber losses in the second quarter, compared to 364,000 departures in the first quarter. Prepaid used to be one of Sprint’s great strengths, driven by its well-known non-contract brands Virgin Mobile and Boost Mobile.
A big source of pressure is T-Mobile(s tmus), Sprint’s likely acquisition target. The country’s No. 4 carrier has become increasingly aggressive, and while the entire U.S. mobile industry has felt T-Mobile’s presssure, Sprint has been particularly hard hit as T-Mobile lures away its budget-minded customers.
Despite those customer losses, Sprint reported its first profit in years, recording a net income of $23 million. During the earnings call, CEO Dan Hesse said the carrier’s prospects are improving and he projected that Sprint would start growing its postpaid customer base again by the end of the year. Sprint now has 54.5 million total subscribers.
Sprint is still mired in its Network Vision upgrade, which is effectively replacing every Sprint cell site with new multi-standard base stations that will host all of Sprint’s various CDMA and LTE networks. The upgrade has been years in the making and is still far from completion. But at the end of the process, Sprint promises to have a 4G network that surpasses all others.
That network called Spark is already deployed in larval form in 27 cities, but over the next year Sprint will pile more spectrum onto the network and trick it out with cutting edge technologies like 8T8R (think a whole lot of antennas).
The problem is Sprint has been promising these kind of miracle networks for years. They always seem to be just around the corner, but they never really get fully built. Sprint now looks set to launch its formal acquisition for bid, and the ensuing year-long battle with regulators could very well put its grand network plans on hold again.
Hesse said the carrier is also looking to shake things up on the service side by exploring new pricing models. It has already launched its Framily program, which accrues collective discounts for its members, and it’s been testing shared data plans. On the prepaid side, Virgin today launched an innovative new pricing program called Virgin Mobile Custom, which allows customers to craft their smartphone plans to their exact use.