Sprint Nextel Has a Turn-Around Quarter

AT&T added two million net new customers in the third quarter. Verizon added 1.2 million net customer additions in its third quarter. Sprint (News - Alert) Nextel reported a loss of 135,000 retail subscribers, which is a combination of our post-paid and prepaid subscribers, but that was the company's best retail net subscriber result in more than two years, says Sprint Nextel (News - Alert) CEO Dan Hesse.

"With respect to post-paid, after years of gross add declines, we are beginning to change this trend," says Hesse. "Both our sequential and our year-over-year improvement in post-paid gross adds were the best in Sprint Nextel history."

 

"We improved our post-paid net subscriber result by almost 200,000 subscribers sequentially, and by more than 300,000 subscribers compared to last year," Hesse also noted.

So here's the issue. On a quarterly basis, the U.S. wireless industry collectively adds something on the order of 3.4 million to 3.5 million net new subscribers each quarter. Between them, AT&T and Verizon added 3.2 million net new subs. That doesn't leave much room for all the other players.

Sprint Nextel hasn't quite clawed its way back to positive net adds, but the progress is tangible. Of the four largest U.S. wireless carriers, only T-Mobile (News - Alert) USA has yet to report (those figures are reported with Deutsche Telekom's quarterly results). But the issue is that there are a total of about 200,000 to 300,000 net new subs yet to be accounted for, if the last quarter is anywhere near normal.

T-Mobile reported 325,000 net new customers added in the second quarter of 2009, down from 415,000 in the first quarter of 2009 and 668,000 in the second quarter of 2008, so the directional trend, all other things being equal, suggests T-Mobile USA will report a smaller net additions figure for the third quarter as well. But any figure in the 200,000 to 300,000 range would suggest that all other providers in the market did not grow measurably at all.

Either that, or there has been an unexpected increase in the net number of new mobile subscriptions in the third quarter. We'll have to wait for the Deutsche Telekom (News - Alert) results to assess this, but one possible implication is that there has been a dramatic slowing of subscriptions for prepaid subscriptions offered by service providers unaffiliated with any of the top four providers.

Slowing growth rates would not be unexpected, but a sharp reversal would be shocking. Consider Sprint Nextel's results, for example.

"Our prepaid business, delivered another very strong quarter, with our third consecutive quarter of over 600,000 net adds," says Hesse. "During the first three quarters of 2009, Boost has generated over 2.1 million net adds, which is more prepaid net adds than any carrier reported on a full-year basis in 2008."

There may be surprises in the mobile business as the financial reporting season winds down.