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Sprint showed signs of turning around its troubled financial performance in the fourth quarter, but the company still continues to bleed customers while its competitors are experiencing unprecedented growth.

Sprint Nextel Corp. today reported Q4 profits $261 million, up 33% from the fourth quarter of 2005, though its yearly profits fell from $1.78 billion in 2005 to $1.33 billion last year. On the subscriber side, Sprint actually posted a net gain of 741,000 million customers in the last three months of the year, but the vast majority of them were wholesale customers from other carriers using the Sprint network and customers from its affiliates. In fact Sprint lost 306,000 postpaid subscribers in the quarter, draining further its most valuable customer base. Sprint said the effect was felt primarily on the Nextel network, where postpaid subscriptions to the iDEN network continued to fall. The only bright point was Boost Mobile, which continued its momentum, adding another 171,000 net prepaid customers in the fourth quarter.

Sprint’s overall revenues increased year-over-year from $9.7 billion in the fourth quarter of 2005 to $10.4 billion last quarter, as did its total 2006 revenues rising from $38 billion to $41 billion. Its churn rate still ranks among the industry’s highest at 2.3% though it fell from 2.4% in the third quarter.

One of Sprint’s bright points, however, was on the data side, where total wireless data revenues increased 66% in the fourth quarter year-over-year. Sprint’s high postpaid ARPU declined slightly to $60 per month, mainly from revenue declines in the iDEN network. Nextel ARPU fell 2% to $62 a month, while the CDMA network’s ARPU remained flat at $59 a month.

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