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Sprint ARPU jumps--is WiMAX the reason?


Sprint (NYSE:S) still isnít reporting WiMAX subscribers, but it did report one metric during its Q1 earnings call to indicate itís seeing success with its mobile broadband and 4G smartphone services: postpaid average revenue per subscriber (ARPU) is increasing, which could only be driven by data services.

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Sprint suffered a net loss of 114,000 postpaid subscribers, but most of those departures came from its dwindling Nextel iDEN and PowerSource CDMA-iDEN customer pools. Sprint added a net total of 310,000 CDMA customers, which is where any gains to its WiMAX subscriber base would appear. Those additions could easily have been 3G customers, but Sprintís postpaid ARPU jumped a whole dollar to $56 per month over both the last year and the last quarter. Though Sprint said that some of that growth came from its new bundled-everything plans, most of those gains came primarily from data. (Sprint: First Quarter 2011 results)

Itís hard to say whether those increases come from more customers signing up for standard data plans on the 3G network or those upgrading to pricier 4G data plans over Sprintís growing complement of WiMAX smartphones. It would help if Sprint would deign to release useful data metrics such as total WiMAX devices or data ARPU, but Sprint has steadfastly refused to release any 4G device data since it started offering Clearwireís WiMAX service, and it stopped reporting data ARPUs last year. The likely reason is Sprintís two biggest competitors, AT&T (NYSE:T) and Verizon Wireless (NYSE:VZ, NYSE:VOD), are wiping the floor with Sprint when it comes to smartphone and mobile broadband activations despite Sprintís head start with WiMAXósomething Sprint isnít exactly refuting.

ďThe iPhone, quarter after quarter, continues to be a successful device and one that provides very strong competition to Sprint,Ē Sprint CEO Dan Hesse said at Sprintís Q1 earnings call. ďNeedless to say Verizonís introduction of their new iPhone this past quarter had a notable impact on our net add performance for the quarter.Ē

Sprint has never even raised the possibility of offering the iPhone itself, but it has to be on the forefront of Hesseís mind. With VZWís introduction of the CDMA iPhone last quarter, thereís no technological or logistical barrier preventing Sprint from offering it (same CDMA chips, same PCS bands, though obviously no WiMAX); it only has to cut a deal with Apple (NASDAQ:AAPL). Pictures have surfaced of a supposed advanced wireless service (AWS)-band iPhone for T-Mobile USA (NYSE:DT), but Apple would need to build a new device for that operator (Unfiltered: A T-Mobile iPhone? Why not?). Sprintís iPhone effectively is already built.

Overall, Sprintís performance continued to improve. Despite Nextelís drain on its postpaid base, Sprint recorded net subscriber additions of 1.1 million, making Q1 its best quarter for customer growth in 5 years. Of those 1.1 million net adds, 846,000 were prepaid customers and 389,000 were wholesale and affiliate connections. Sprint now has 51 million total subscribers, of which 65% are postpaid and 26% are prepaid, while the remainder are wholesale.

One of the reasons for Sprintís growth is it did a much better job at keeping the customers it already had. Its postpaid churn dropped to a record low of 1.81%, while prepaid churn dropped below 5%. Although itís still seeing postpaid customers depart, it has managed to stem the exodus considerably. In last yearís Q1 it reported 578,000 net postpaid losses, as opposed to only 114,000 last quarter (CP: Sprint: itís a prepaid world).


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