Sprint loses wireless customers

[ComicalMoodyDan]

Sprint loses wireless customers


By Reuters
September 23, 2002, 8:47 AM PT


Telephone company Sprint on Monday said its wireless telephone unit has lost customers as it shed subscribers who failed to pay their bills.
However, its core long-distance business picked up corporate customers from its ailing rivals.


The unexpected loss of customers at Sprint PCS, the No. 4 U.S. wireless telephone company, marked a sharp reversal for the once-booming wireless unit and overshadowed the news that full-year profits at Sprint's main FON Group telephone unit would be above Wall Street expectations.



"The bad news at Sprint PCS significantly offsets the good news at the global markets level at FON. It's a shock," Guzman & Co. analyst Patrick Comack said.

Sprint PCS said it shut off service to a "significantly higher number" of customers on its Clear Pay program, which sets a spending limit, who failed to pay their bills. Although Sprint PCS initially saw a boost in subscribers from the promotion, it faced criticism from analysts about the lack of quality of its new customers.

"It's ugly. This could reflect poorly on the whole sector...Maybe (market) penetration has gotten to the point that only net adds are the undesirable customers," Comack said.

Sprint, which on Sunday agreed to sell its telephone directory business for more than $2.2 billion, has been winning business customers from financially troubled rivals such as WorldCom and Qwest Communications International It said it has won more than 50 large corporate customer and wholesale accounts in this quarter alone.

"Before Sprint was banging on these customers' doors to get business, but now these enterprise customers are banging on their door," Comack said.

As a result, Sprint said it expects earnings per share, excluding one-time items, for its FON Group business to be in a range of $1.41 to $1.43 this year. That compares with previous guidance of at least $1.40 per share, and the $1.26 per share excluding one-time items it earned the previous year.

The company also reiterated it expects its FON Group's earnings before interest, taxes, depreciation and amortization (EBITDA) for the year will be about $4.7 billion, with a mid-single-digit decline in revenue.

FON Group, which is the No. 3 U.S. long-distance telephone company, estimated that capital expenditures this year would be $2.4 billion, down from the previous estimate of $2.5 billion.

Sprint said its FON Group's free cash flow this year is expected to be about $1.2 billion, up from $1 billion in the previous guidance. As a result of the reduced capital spending and improvement in working capital, it now expects to generate positive free cash flow of about $200 million compared with previous guidance for break-even free cash flow.

Sprint is scheduled to announce its third-quarter results on Oct. 17.

The company on Sunday said it has reached a definitive agreement to sell its phone directory business to R.H. Donnelley for $2.23 billion. The deal is expected to close in January 2003 and is subject to antitrust approval and other conditions. Sprint said the sale will yield after-tax cash proceeds of more than $2 billion.

Sprint loses wireless customers

[IdiOTeQnoLogY]

ouch! i made my quota at least lol [img]i/expressions/face-icon-small-wink.gif[/img] from what i can see in the ny market things are going good. glad to read about the directory business i knew they had it onsale they needed the cash inflow to keep capital expenditures going.

[Matt]

They are doing all at once what T-Mobile has been doing slowly over the last two years....