Sprint posts $863 million loss, but that's not the whole story
To put that loss into perspective, Sprint lost $439 million during the first quarter of 2011. — Sprint Nextel started off 2012 on a sour note, the company revealed today in its first-quarter earnings release.
Context & Ripple Effects
Sprint enters its 2012 network transition with a longer subscriber-pressure backdrop: it had lost 1.3 million customers in a 2008 quarter. The company is selling its first LTE-capable handsets before officially launching LTE, while maintaining unlimited data for the next iPhone generation.
First-order effects
- Sprint's first-quarter loss more than doubled from the year-earlier period, increasing the financial burden of funding its LTE transition.
- Customers considering the next iPhone retain access to Sprint's unlimited-data proposition despite the quarter's loss.
Second-order effects
- Selling LTE-capable phones ahead of an official LTE launch puts pressure on Sprint to align network availability with handset demand.
- Sprint's decision to preserve unlimited data makes its network capacity and rollout execution central to defending a pricing-and-plan distinction.
Third-order effects
- The results illustrate how a carrier's handset strategy and network investment can compound financial strain during a technology transition.
- If Sprint continues pairing unlimited data with LTE devices, carrier competition will hinge more heavily on whether network build-outs can support differentiated plans.
The trend: U.S. carriers are tying device upgrades to LTE migrations, making network investment and data-plan policy increasingly inseparable.