NEW YORK (AP) — Sprint Corp., the ailing No. 3 of the U.S. wireless business, has had the surgery. Now it's in for a trying recovery period.
In the last few months, Sprint has sold a majority stake to Softbank Corp. of Japan, bought the failing Clearwire network and shut down its own Nextel service, which had dogged its results for years.
Sprint is now racing to make up for lost time. With the help of Softbank's cash, it's quadrupling its capital spending to make up for years of underinvestment in its network, which lags those of competitors in terms of data speed and coverage. That's good for subscribers but not necessarily good for investors who are exasperated with the company's 23 consecutive quarters of losses.
CEO Dan Hesse said Tuesday that he expects Sprint to have a hard time gaining subscribers on its contract-based plans, which generate the most revenue, until next year, when the company fires up new antennas on its cell towers and has phones that can take advantage of them.
Sprint's second-quarter results, reported Tuesday, were hampered by the shutdown of the Nextel network, which it bought in 2005. It was popular for its push-to-talk feature, which let phones work like walkie-talkies. The service, however, wasn't compatible with Sprint phones and didn't support wireless broadband, which is necessary for smartphones. The cost of running two incompatible networks was a big part of the reason Sprint hemorrhaged money for years.
The quarter was "ugly, but no worse than expected," said Kevin Smithen at Macquarie Capital.