UPDATE 2-Sprint Q3 revs drop; warns of continued subscriber pressure
Oct 30 (Reuters) - Sprint Corp posted a decline in third-quarter revenue on Wednesday as it lost more subscribers than expected following the shutdown of its older iDen network and warned that customer defections would remain high in coming quarters.
But investors shrugged off the weak results, pushing up Sprint shares by 1.8 percent in premarket trade as the company maintained its financial targets for full-year 2013 and focused on improvements it promised for 2014.
Sprint, the No. 3 U.S. mobile operator which is 80 percent owned by SoftBank Corp, reported net subscriber losses of 360,000 for the quarter. Six analysts contacted by Reuters expected losses of roughly 313,000, on average.
By comparison, Sprint's biggest rival, Verizon Wireless added 927,000 subscribers in the quarter, and No. 2 U.S. mobile provider AT&T Inc added 363,000. Smaller rival T-Mobile US Inc is due to report results Nov. 5.
Sprint said it suffered from service problems in the quarter due to a massive network overhaul as well as the expected loss of corporate customers due to the June shutdown of its iDen network, which was used mostly by business customers.
Chief Executive Dan Hesse told analysts on a conference call that customer defections would continue to be at high levels into the middle of 2014, when the company expects to complete the bulk of the network overhaul.
Sprint is working on increasing data service speeds on its network and adding capacity from spectrum previously used by the iDen network as well as spectrum from Clearwire Corp, which Sprint bought out in July.
"We're finally turning the corner on this massive project and seeing a light at the end of the tunnel," Hesse said.
Roe Equity Research analyst Kevin Roe said Sprint's results were mostly in line with his low expectations.
"This is a very challenging transition period for Sprint and so the focus is on 2014," Roe said.
Investors hope Sprint will compete better with the help of the network upgrade and with financial backing from Japan's Softbank, which bought a controlling stake in Sprint for $21.6 billion in July.
One expectation is that Sprint will eventually be able to massively boost its network capacity after its Clearwire takeover, which brought it vast amounts of wireless airwaves.
Sprint reported a third-quarter profit of $383 million, compared with a loss of $767 million in the year-ago period, before its SoftBank and Clearwire deals.
The company said the latest quarter was helped by a one-time, non-cash, $1.4 billion gain, net of taxes, related to its previously held investment in Clearwire.
Revenue fell to $8.68 billion from $8.76 billion.
Sprint still expects 2013 adjusted earnings before interest, taxes, depreciation and amortization of between $5.1 billion and $5.3 billion, including the dilutive effects of the SoftBank and Clearwire transactions. It also stuck by its target of 2013 capital expenditures of about $8 billion.
Sprint shares rose to $6.80 premarket after closing at $6.68 in the previous New York Stock Exchange session.