(Updates information on Clearwire and IPCS lawsuit in the 18th paragraph and analyst comments in the 10th and 14th paragraphs.)
By Roger Cheng
DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Sprint Nextel Corp. (NYSE:S) (S) reported a wider first-quarter loss as its most valuable subscribers - those who sign long-term contracts - continue to defect, but Chief Executive Dan Hesse indicated things were slowly turning around.
The turnover rate for so-called post-paid customers will be slightly better than in the second quarter, Hesse told analysts during a conference call on Monday.
"Improving the customer experience and being more selective about the customers we acquire should improve churn, but we expect that post-paid subscriber losses will improve only marginally from first-quarter levels," Hesse said.
Sprint, the No. 3 U.S. player by subscribers, has been hemorrhaging long-term subscribers in a bare-knuckled battle with rivals AT&T Inc. (NYSE:T) (T) and Verizon Wireless. It reported a net loss of $505 million, or 18 cents a share, for the quarter, compared with a year-earlier net loss of $211 million, or 7 cents a share.
The latest results included $317 million of pretax merger and integration- related charges. In the fourth quarter, Sprint posted a $29.5 billion loss - one of the largest in corporate history - largely due to a massive write-down of the value of Nextel, which has suffered from poor network quality and customer service.
Excluding items, earnings fell to 4 cents a share from 18 cents. Revenue fell 8% to $9.33 billion due to wireless weakness.
Analysts polled by Thomson Reuters had expected earnings, excluding items, of 2 cents a share on revenue of $9.41 billion.
In recent trading, Sprint shares rose 30 cents, or 3.2%, to $9.68.
Sprint has been losing badly to AT&T and Verizon Wireless as the telecommunications giants try to steal one another's lucrative, long-term subscribers - one way they can grow with 80% of U.S. consumers already owning a cellphone.
"Sprint's first-quarter results and rest-of-year guidance offer no clear sign of sustainable improvement," said Craig Moffett, an analyst at Sanford C. Bernstein & Co. "That leaves us more than a little cautious about the sustainability of Sprint's strong recent run."
While there are signs of improvement, Sprint will continue to struggle. Hesse said he expects average revenue per user to erode in the second quarter. Operating income before depreciation and amortization will face "downward pressure" in the period before stabilizing by the end of the year.
Sprint's post-paid subscribership tumbled 1.1 million during the quarter, pushing total subscribership down 1.5% from a year earlier to 52.8 million.
