Sprint announces Q3 earnings: net subs reach five year high, net losses at $300 million

Year-over-year and sequential Adjusted OIBDA* growth driven by ARPU strength and continued wireless subscriber growth

Postpaid ARPU growth of $1 sequentially; $3 year-over-year improvement best in almost 12 years
Nearly 1.3 million total net new wireless subscriber additions – best in additional than five years
Eight consecutive quarters of net postpaid subscriber growth for the Sprint brand and likewise for year-over-year improvement in postpaid churn
The company’s third quarter 2011 earnings conference call can be held at 8 a.m. EDT today. Participants may dial 800-938-1120 within the U.S. or Canada (706-634-7849 internationally) and supply the ensuing ID: 15483737 or may listen via the net at www.sprint.com/investor.

OVERLAND PARK, Kan.–(BUSINESS WIRE)–Sprint Nextel Corp. (NYSE: S) today reported that in the third quarter of 2011, the corporate generated net operating revenues of $8.3 billion and altered OIBDA* of $1.4 billion. Adjusted OIBDA* grew sequentially and year-over-year driven primarily by strength in postpaid ARPU and continued growth within the prepaid wireless customer base. Postpaid wireless ARPU increased $3 from the year-ago period and the prepaid subscriber base has grown 23 percent because the third quarter of 2010.

The corporate achieved its best total company wireless net subscriber additions in additional than five years. The corporate added nearly 1.3 million total net wireless subscribers, primarily driven by 304,000 net postpaid additions for the Sprint brand, net prepaid additions of 485,000 and net wholesale and affiliate additions of 835,000.

Growth in Sprint brand net additions was achieved without the advantage of Apple’s iPhone 4S and iPhone 4, which launched Oct. 14. The launch of this iconic device ended in Sprint’s best ever day of sales in retail, web and telesales for a tool family in Sprint history. The response to this device by current and new customers has surpassed initial expectations. The iPhone is anticipated to be accretive for Sprint, and iPhone users are expected to be among Sprint’s most profitable customers.

Additionally, the corporate reported operating income of $208 million, a net lack of $301 million and a diluted lack of $.10 per share for the quarter, inclusive of $261 million in equity losses of unconsolidated investments and other. This compares to an operating lack of $213 million, a net lack of $911 million and a diluted lack of $.30 per share, which included $284 million in equity losses of unconsolidated investments and other inside the third quarter of 2010.

“Sprint’s center around creating the correct customer experience with simple, unlimited plans and innovative services and products continues to reinforce our brand and drive positive results,” said Dan Hesse, Sprint CEO. “We’re adding to our customer base, our ARPU is increasing, and because of this our wireless revenues are growing.”

As of Sept. 30, 2011, the company’s total liquidity was approximately $5 billion, which include $4 billion in cash, cash equivalents and short-term investments and $1 billion of undrawn borrowing capacity available under its revolving bank credit facility. The company’s next scheduled debt maturities of $2.3 billion are due in March 2012.

Throughout the third quarter, third parties continued to validate Sprint’s progress. Sprint was ranked highest by J.D. Power and co-workers among full-service providers in a tie in its 2011 Wireless Purchase Experience Study, Volume 2. The study also found Sprint led the industry in its website buying experience. Boost Mobile was ranked by J.D. Power and co-workers as highest within the Wireless Purchase Experience Study, Volume 2 in addition to highest in 2011 Wireless Customer Care Performance, Volume 2 with Non-Contract Service. Additionally, Sprint earned the No. 3 spot a number of the largest U.S. companies on Newsweek’s 2011 Green Rankings. Here is the second one straight year that Sprint has ranked inside the top 10, up from No. 6 last year.

Sprint also added to its innovative portfolio of goods and services. It launched three additional 4G phones – Samsung Conquer™ 4G, Motorola PHOTON™ 4G and the 1st Samsung Galaxy S™ II product available inside the U.S., Samsung Galaxy S™ II, Epic™ 4G Touch. This week Sprint launched its 25th 4G device – HTC EVO Design 4G™. Sprint also added the BlackBerry® Torch™ 9850, the 1st all-touch BlackBerry® smartphone from Sprint, BlackBerry® Bold™ 9930, the thinnest BlackBerry® smartphone ever and the BlackBerry® Curve™ 9350. Boost Mobile grew its smartphone lineup of Android™ devices with the launch of the Samsung Transform™ Ultra, and Virgin Mobile USA launched the Android-powered Motorola TRIUMPH™ and announced the approaching availability of the LG® Optimus™ Slider.

Consolidated net operating revenues of $8.3 billion for the quarter were 2 percent higher than within the third quarter of 2010 and remained relatively flat compared to the second one quarter of 2011. The quarterly year-over-year improvement was primarily due to the higher postpaid ARPU and growth within the variety of net prepaid subscribers, partially offset by lower wireline revenues and lower wireless equipment revenues.

Adjusted OIBDA* was $1.4 billion for the quarter, in comparison to $1.3 billion for the third quarter of 2010 and the second one quarter of 2011. The quarterly year-over-year improvement in Adjusted OIBDA* was primarily because of higher postpaid and prepaid wireless service revenues, partially offset by a rise in wireless cost of service, higher equipment net subsidy, and lower wireline revenues. Sequentially, quarterly Adjusted OIBDA* improved primarily as a result higher postpaid and prepaid wireless service revenues, reduced marketing expenses, and partially offset by higher wireless cost of service.

Capital expenditures(1), excluding capitalized interest of $103 million, were $760 million within the quarter, when compared with $462 million within the third quarter of 2010 and $640 million within the second quarter of 2011. Wireless capital expenditures were $647 million within the third quarter of 2011, in comparison to $341 million within the third quarter of 2010 and $546 million inside the second quarter of 2011. In the course of the quarter, the corporate invested in data capacity because of increased data usage, in addition approximately $115 million for our Network Vision plan. Wireline capital expenditures were $36 million within the third quarter of 2011, in comparison with $59 million within the third quarter of 2010 and $35 million within the second quarter of 2011. Corporate capital expenditures were $77 million within the third quarter of 2011, when compared with $62 million inside the third quarter of 2010 and $59 million within the second quarter of 2011, primarily with regards to infrastructure to support our Wireless and Wireline businesses.

Free Cash Flow* was negative $273 million for the quarter, in comparison to $384 million for the third quarter of 2010 and $267 million for the second one quarter of 2011. While Adjusted OIBDA* was relatively stable for the quarterly year-over-year and sequential periods, Free Cash Flow* was reduced by quarterly year-over-year increases in capital expenditures of $328 million in addition to year-over-year and sequential increases in working capital of $483 million and $697 million, respectively, partially offset by spectrum hosting prepayments.

The quarterly year-over-year change in working capital is primarily linked to increased inventory balances and reductions in accounts payable. The quarterly sequential change in working capital is primarily related to the reduction in accounts payable linked to the second one quarter build-up of inventory partially offset by reduced inventory purchases in the course of the third quarter of 2011.