Sprint Shares Up After Reporting High Revenue Per User

Sprint (NYSE: S), the third largest U.S. wireless carrier, surged after the company reported earnings on Thursday before the market open. The company reported a net loss of $1.4 billion, compared to a net loss of $837 million in the same period last year. Despite the widened gap in net loss, the company revenue growth was 16 percent and the company increased its revenue per user. The company also gained its guidance for its full year 2012.

The company reported a record breaking average revenue per user (ARPU) of $63.38, compared to the average analyst estimates of $60.02 per user. Along with higher bills paid by customers, Sprint saw strong iPhone sales of 1.5 million activations, 40% of the iPhones went to new customers. The company also reported revenue of $7.3 million, an 8% year-over-year update. This was the largest year-over-year increase on record for the US wireless industry.

Dan Hesse, Sprint CEO, stated, “The Sprint platform achieved best ever postpaid ARPU and customer churn that, combined with disciplined customer acquisition and cost management, contributed to our Adjusted OIBDA* of $1.45 billion. Based on this performance, we are raising the 2012 Adjusted OIBDA* forecast to between $4.5 billion and $4.6 billion.”

Sprint also continues to exit Nextel sites, and has taken 9,600 off-air to date. A majority of the customers that are leaving Nextel are being recaptured by Sprint. 60 percent of these subscribers have returned to Sprint. The company is still enduring operating expenses because of contracts with Nextel.

The company stated that there was an increase in expenses primarily due to the launch of the iPhone under its service. The phone carries a higher subsidy rate per handset in comparison to Sprint's other devices. Hesse states that he still supports the decision to carry the iPhone.

On Thursday, the company also announced that it would expand its 4G wireless service in Baltimore, Gainesville, Junction City, and Sherman-Enison before Labor Day. Sprint was the first wireless carrier to introduce 4G services in 2008. On July 15, Sprint launched 4G services in four new major markets and fifteen cities. The company continues to expand its products that are 4G compatible.

Sprint updated its full year 2012 adjusted OIBDA to a range of $4.5 billion to $4.6 billion. Its prior forecast was a range of $3.7 billion to $3.9 billion.

Sprint traded up about 20 percent on Thursday. Year-to-date, the company is up about 72 percent.