Sprint loses $3.1 billion in 4Q

Although Sprint Nextel Corp. sold nearly 2 million iPhones last year, the company has lost more than $1 billion due to costly subsidies. Sprint plans to make back the money through the iPhone's two-year contract.

Danny Johnson/AP
The Sprint logo is displayed on a Blackberry Curve smart phone at a Little Rock, Ark., Best Buy store. The iPhone helped Sprint gain customers in the latest quarter, but also forced the carrier to post its largest loss in three years because of the high cost of the phone a network upgrade.

Sprint Nextel Corp. sold 1.8 million iPhones late last year – 40 percent of them to new customers – and ballooned its net loss to $1.3 billion in the fourth quarter.

The loss partly reflected subsidies Sprint gives customers on each of the iPhones it sells, charging customers less than it costs to buy the phones from Apple Inc.

Such subsidies are common in the industry, and Sprint executives have said customers' payments over time will make the iPhone profitable for Sprint.

IPhone sales helped Sprint boost its number of subscribers by 1.6 million in the quarter to 55 million. The total is highest in Sprint's history, the company said.

Sprint's net new customer growth included 161,000 under 2-year contracts, 507,000 buying service month to month and 954,000 buying service on Sprint's network through affiliated companies and wholesale vendors.

Revenues rose to $8.72 billion in the quarter, up more than 5 percent from a year ago.

"Our strong fourth quarter performance illustrates the power of matching iconic devices like the iPhone with our simple, unlimited plans and industry-leading customer experience,' CEO Dan Hesse said in the announcement. "During the past year, Sprint added more than 5 million net new customers and grew wireless revenues by more than 5 percent."

Expenses other than the iPhone, including Sprint's network upgrade project, also increased its loss, which was 40 percent higher than in the fourth quarter of 2010. The recent loss equaled 43 cents a share compared with 31 cents a year ago.

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