LIVE: Sprint Nextel (S) Earnings Analysis

Release, Webcast

Conference Call Notes:

  • 8:33 Q&A. Earlier notes after jump.
  • 8:34 18% margins on wireline side, expect to drop to around 15% range.
  • 8:35 How are cheaper Boost plans a good thing? Expecting data revenue and new handsets to help out.
  • 8:38 $73 million WiMax spend, running slightly behind in network equipment buying. Still on track for soft-launch in Chicago, Baltimore, D.C.
  • 8:39 QChat (new walkie talkie system) alpha this quarter, beta testing early next year. Expect to introduce in early 2008. Moving customers a multi-year process.
  • 8:42 Two trends in ARPU: Existing customers spend more and more valuable than new customers. Sprint CDMA ARPU flat to up, data making up for voice. On Nextel, no high-speed data, can’t offset voice ARPU decline. Hybrid phones helping a little.
  • 8:47 Aircard impact on network congestion? No. Some customers “abusers” of their unlimited plans. Able to accommodate all of the traffic with current capex.
  • 8:49 Pivot partnership with cable companies: Launched in 30-some markets, in 20% of stores. Deciding not to expand to more markets or stores. Still very complex to provision. Very difficult to deliver. Still strategically aligned with cable companies, simplifying.
  • 8:57 Very confident with state of Nextel network. Every market has best-ever dropped call statistics. Fewer subscribers has also improved quality.
  • 9:04 Churn/customer retention a daily “fight in the trenches”
  • 9:05 Customer base less than 25% sub-prime. Have tightened credit very recently.
  • 9:16 Nextel brand to be de-emphasised. Nextel Cup becoming Sprint Cup.
  • 9:19 Why new iDen devices (pure Nextel) now that introducing hybrid devices? Business customers, specific applications, government subs, etc.
  • 9:22 Call over.
  • 8:18 Joining call in progress.
  • 8:18 No longer holding back Nextel sign-ups. Introducing 3 new devices, and rolling out push-to-talk on CDMA in early 2008.
  • 8:19 Churn increased from 2% in Q2 to 2.3% in Q3 due to “seasonal” and “competitive” conditions. iPhone?
  • 8:20 “The most important information!” Operating with new sense of urgency and committed to “dramatic” actions to fix business.
  • 8:21 Simplifying business — fewer launches, better Web site, especially for sub-prime customers. Easier pricing plans, more customer-friendly policies. More to say “in coming weeks.” Where’s the GPhone!
  • 8:24 Expect about 70% of post-paid customers on new billing/support platform by early 2008.
  • 8:25 Boost pre-paid at 4.3 million subs. Negative net adds in Q3, will continue in Q4. Subs using fewer cellular and walkie-talkie minutes. Boost “unlimited” trial in California and Texas up to 226,000 subs. Adding thin Motorola flip phone. Launching in 10 new markets, 900 Wal-Mart locations, in Radio Shack this month. Launching wireless data services. (Messaging and Web.)
  • 8:28 $1.2 billion capex — expanding data network to support “QChat,” the new Nextel technology. Full year wireless capex to be below previous guidance to focus on free cash flow.
  • 8:29 2.6 million cable VoIP subs, double a year ago.
  • 8:30 Full-year WiMax spend also should be below guidance. (Spooked?)

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