Sprint to Cut Jobs, Reports Continued Subscriber Loss

In an effort to combat a continued loss of wireless subscribers and profit, Sprint Nextel Corp. said Friday it would be closing down 8 percent of its 1,400 retail stores, along with more than 4,000 of its 20,000 third-party distribution points, while eliminating 4,000 jobs and cutting back on outsourced services and contractors in the first half of the year.

The total savings from the reductions? As much as $800 million. Nonetheless, Sprint stocks plunged to their lowest level in five years on the news, down 26 percent, or $3.01, to $8.56 in mid-day trading.

Wall Street’s reaction is unsurprising given that the streamlining is something of a Hail Mary for the No. 3 cellco. Sprint is hoping to buoy its performance this year with the cuts, as it anticipates “continued downward pressure on subscriber trends, revenues and profitability in 2008.” The forecast is continuing a theme for the operator, which has suffered hard times of late: After a shocking third-quarter 2007 loss of 77 percent in profit, Sprint saw the ouster of its CEO, Gary Forsee, the dissolution of its alliance with Clearwire Corp. to build out a nationwide WiMAX network, the back-burnering of its “Pivot” joint venture with the cablecos, and continued subscriber drain, particularly from its high-value postpaid base.

In fact, Sprint reported losses of 885,000 direct subscribers in the fourth quarter, the lion’s share of which were postpaid at 683,000. Postpaid churn was at 2 percent to 3 percent.

One bright spot for Sprint are the gains from its indirect efforts. It added 500,000 new wholesale subscribers in the fourth quarter, 256,000 new Boost Unlimited users and net additions of 20,000 subscribers within affiliate channels, all totaling about 776,000 additions to the base.

At the end of 2007, Sprint Nextel served a total subscriber base of 53.8 million subscribers including 40.8 million postpaid, 4.1 million traditional prepaid, 500,000 Boost Unlimited, 7.7 million wholesale and 850,000 subscribers through affiliates.

Meanwhile, Sprint’s Nextel arm said it too would be streamlining soon.

Sprint expects to announce fourth quarter and full-year 2007 results on Feb. 28.

Sprint Nextel Corp. www.sprint.com

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