Sprint Nextel, the No. 3 U.S. wireless service provider, reported a wider quarterly loss Monday on steep customer defections, and forecast only marginal improvements in the current quarter.
Sprint also said it could seek waivers or amendments from its creditors, even though it expects to have enough cash on hand to operate its business and repay all its maturing debts through the end of 2009.
"This is a nightmare game of whack-a-mole where new problems keep popping up faster that you can address," said Bernstein analyst Craig Moffett.
"The fact they're now talking openly about their available liquidity makes it clear this is not a short term turn around," said Moffett referring to Sprint's expectation it would have positive free cash flow for the rest of 2008.
Sprint posted a first quarter net loss of $505 million, or 18 cents a share, compared with a loss of $211 million, or 7 cents a share, a year earlier.
Excluding one-time items and merger-related expenses, it earned 4 cents per share, compared with the average analyst forecast for 2 cents a share, according to Reuters Estimates.
Revenue fell to $9.3 billion from $10.1 billion. Analysts on average had expected revenue of $9.4 billion, according to Reuters Estimates.
Sprint warned of continued pressure on gross additions of post-paid customers, who pay monthly bills, and post-paid average revenue per user, as well as adjusted operating income before depreciation and amortization in the next few quarters.
But the company expects post-paid churn, or customer turnover, and net post-paid subscriber losses to improve marginally in the current quarter.
It plans to provide an update in August of its continued assessment of its business model, associated with sales, distribution and marketing plans and its financial outlook.
Sprint ended the first quarter with 52.8 million customers, compared with 53.6 million at the end of the first quarter of 2007, reflecting a smaller base of post-paid and affiliate customers, partially offset by increases in prepaid and wholesale customers.
It had reported 53.8 million customers at the end of 2007, implying a loss of 1 million customers in the quarter. AT&T Inc and Verizon Wireless, a venture of Verizon Communications and Vodafone Group, both reported customer additions in the quarter and analysts have said these bigger companies took market share from Sprint.
Sprint said wireless service revenue fell 9 percent year over year and 6 percent sequentially.
The company, which last week announced a WiMax venture with Clearwire Corp, has seen its share price fall about 65 percent since its $35 billion purchase of Nextel Communications in 2005. It wrote off most of the value of that deal in the fourth quarter of 2007.
Sprint shares were trading slightly higher in early morning trading.