Much to the chagrin of the top brass of Sprint-Nextel, the third largest telecommunications company in the US, a research report from Probe Financial Associates Inc., voiced concern that the year-old merger of the two carriers might be ripe for a takeover. While not many would buy this argument, at least for now, a string of developments in recent times does suggest that all is not well with the operator. In an announcement that dampened investor sentiments, the company said that it incurred losses of $211 mn during the first quarter ended March 31, 2007, while adjusted operating earnings dipped 45%. Besides, it also saw erosion in the subscriber base as customers migrated to rival carriers, blaming the carrier's faulty network for poor connectivity; it lost about 222,000 post-paid subscribers during the quarter. Worse, its post-paid ARPU (Average Revenue Per User) too took a beating as it dipped to just over $59, down nearly 5% a year ago, thus raising concerns about its loss in market share to rivals like Verizon and Cingular, owned by AT&T.
The $43.60 bn carrier is now trying desperately to seek a turnaround through a plethora of measures that involve recent management reshuffle in marketing and customer services divisions.
The signs of which are already visible now. While the New York-based Verizon ended the first quarter with 60.7 million customers with a gain of 1.7 million customers, and the Texas-based AT&T added 1.2 million customers to take its subscriber base to 62.2 million, Sprint Nextel could attract just 0.6 million new subscribers, largely less-valuable pre-paid customers who tend to move among the carriers and spend less each month, to take its customer base to 53.6 million. |
