Sprint’s Financial Woes Put Cloud Over WiMax

Sprint has reported its financials for the first quarter of 2009...and they're dire enough to make people wonder whether WiMax is really going to happen.

Telecommunications operator Sprint has released its financial results for the first quarter of 2009, and while the company did see a surge in sign-ups for pre-paid wireless calling plans, the company posted $594 million net loss for the quarter on $8.2 billion in revenue. The figures represent an 18 percent decline in earnings from the first quarter of 2008, when the company lost a mere $508 million on $9.3 billion in revenue.

Sprint also continues to lose subscribers, with overall postpaid wireless subscribers down by 1.25 billion during the first quarter. In comparison, Sprint lost 1.07 million wireless customers during the first quarter of 2008. The first quarter also saw an uptick in the churn rate of postpaid wireless subscribers, up to 2.25 percent in the first quarter compared to 2.16 percent in the same quarter a year ago. Prepaid calling signups represented a bit of a bright spot for the company, with the carrier adding 674,000 prepaid calling customers to its rolls, along with almost 400,000 wholesale and affiliate subscribers—those numbers mean that the overall drop in wireless customers was just 182,000, a big improvement over the 1.09 million lost in the first quarter of 2008. However, prepaid plans—though popular in tough economic times—generate less revenue per subscribers than pre-paid plans.

The tone of Sprint’s numbers—and the company’s continuing ability to hemorrhage money and subscribers—is casting a pall over the Clearwire/Sprint partnership to roll out nationwide WiMax 4G wireless broadband. Industry watchers have raised the possibility that Sprint may pull out of the partnership entirely—possibly to make itself a more tempting acquisition target for Verizon—leaving WiMax to Clearwire and other partners. Verizon has committed to WiMax’s primary competing technology, LTE, for 4G services once U.S. broadcast television gets out of the needed frequencies.