Hesse in February warned that Sprint would lose an estimated 1.2 million long- term contract subscribers in the first quarter and warned the losses would continue in the second quarter.
Average revenue per post-paid user fell 6% while post-paid churn, or customer turnover, rose to 2.45% from 2.3%. The deterioration is worrisome.
"Not only is Sprint losing customers...they are losing their best customers," Moffett said.
Sprint also lost 543,000 traditional prepaid users during the quarter, partially offset by gains of 343,000 at Boost Unlimited and 183,000 wholesale and affiliate subscribers.
Hesse, who took over as CEO in December after former chief Gary Forsee was forced out, said in February that it could take Sprint "many quarters" to get on track. Hesse promised to put renewed emphasis on Nextel, such as offering new handsets for users including a BlackBerry with Wi-Fi capabilities.
Speculation re-emerged last week that Sprint may spin off or sell the Nextel operations. The company said in its release that it was exploring the sale of noncore assets to meet its financial obligations.
Hesse declined to comment on the sale of the asset, only saying that Sprint was "committed to reinvigorating the Nextel assets" and noting that such a spin- off would be complex.
Last Wednesday, Sprint unveiled a joint venture with Clearwire Corp. (NASDAQ-NMS:CLWR) (CLWR) to offer next-generation high-speed wireless service. The massive partnership, which involved investments from the leaders of the cable, Internet and semiconductor industries, was lauded because it took the burden of investment off of Sprint's books.
A potential hiccup is a lawsuit filed by Sprint affiliate IPCS, which claims that the new Clearwire deal violates its exclusive rights to offer wireless service in its territory. IPCS is seeking an injunction preventing Sprint from closing the transaction until terms can be changed.
In addition to improving customer service, Sprint said it would focus more on retaining its most valuable customers. Hesse said the newly launched "Simply Everything" plan - which includes unlimited voice, text messaging, Web surfing and e-mail - has done well in keeping customers on Sprint. Later this year, the carrier plans to offer its Apple Inc. (NASDAQ-NMS:AAPL) (AAPL) rival Instinct to existing customers first.
-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com
(Mike Barris contributed to this report.)
(END) Dow Jones Newswires 05-12-08 1212 Copyright (c) 2008 Dow Jones & Company, Inc.
