Sprint Nextel Corp. (S)
Q1 2010 Earnings Call
April 28, 2010 08:00 am ET
Yijing Brentano - IR
Dan Schulman - President, Prepaid Group
Bob Brust - CFO
Dan Hesse - CEO
Ric Prentiss, Jr.
Previous Statements by S
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Miss Brentano, you may begin your conference.
Thank you, Janice. Good morning and welcome to Sprint Nextel's first quarter 2010 earnings call. Thanks for joining us this morning. For the format of the call, Dan Hesse, our CEO, will discuss operational performance in the quarter. And then our CFO, Bob Brust, will cover the financial aspects of the quarter. Before we get started, let me remind you that our release and the presentation slides that accompany this call are both available on the Investor Relations' page of the Sprint website.
Slide two is our cautionary statement. I want to point out that in our remarks this morning; we will be discussing forward-looking information, which involves a number of risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC filings, which I encourage you to review, including our Form 10-K for 2009.
Turning to slide three; throughout our call, we will refer to several non-GAAP metrics. Reconciliations of our non-GAAP performance and liquidity measures to the appropriate GAAP measures for the first quarter can be found on the attachments to our earnings release and also at the end of today's presentation, which is stored on our website at www.sprint.com/investors.
Next, I would like to cover our EPS results. Basic and diluted loss per common share for the first quarter was $0.29, compared to $0.34 in the fourth quarter 2009 and $0.21 in the year ago period. Approximately $0.12 of the first quarter 2010 loss per share was due to an increased valuation allowance on deferred taxes. Bob will discuss this further in his remarks.
I will now turn the call over to Sprint CEO, Dan Hesse.
Thank you, Yijing and thank you for joining us this morning. Let me begin by saying that as I reflect on my ninth quarter at Sprint, I am encouraged by the improvements we've made especially in light of the declining performance trend lines we entered 2008 with.
Our turnaround has been made more difficult by a weak economy in late 2008 and in 2009 plus the strong competitive challenges we faced. But what were negative sequential and year-over-year trends have changed from negative to flat and some are now turning positive.
If you go to slide four, the first quarter represents our first sequential increase in total net operating revenues and wireless service revenues in nearly three year. Consolidated adjusted OIBDA and adjusted OIBDA margin both grew sequentially. And perhaps most important of all, our post-paid net adds shows the best year-over-year improvement in five years driven by the largest share of gross adds or SoGA improvement in five years estimated now at 500 basis points, an increase in gross add market share of 45%.
We continue to execute well around our three priorities, which are improving the customer experience, strengthening our brand and generating cash.
Starting with the first, with respect to customer experience, I am pleased to report our 9th consecutive quarter of improvement in customer care satisfaction and in first call resolution. As Cliff Moore, the Chairman and Co-Founder of the Customer Operations Performance Center or COPC, the world's leading authority on customer contact centers recently said and I quote, 'Sprint's nine consecutive quarters of improvement in first call resolution and customer satisfaction is a true rarity and it is at the highest end of best-in-class levels, demonstrating continuous improvement in the contact center industry.
Our customer satisfaction top-box score has improved 15% year-over-year and is at an all-time high. Our bottom-box score has improved 35% year-over-year, also reaching an all-time best. And we're not buying satisfaction with billed credits. We've reduced customer care credits by 47% versus last year.
In the recent JD Power Wireless Customer Care survey, Sprint improved the most of any carrier, 17 points versus the industry's four points. Sprint alone accounted for half of the improvement shown by the entire industry.
Our networks are also performing at their best levels ever as measured by drops and blocked calls. Based on a survey of large businesses by the Yankee Group and Mobile Enterprise Magazine, business customers with more than 500 employees, ranked Sprint number one in voice service satisfaction and number one in data service satisfaction.
If you adjust post-paid churn for the discontinued Helio platform we acquired as part of the Virgin Mobile transaction, our churn of 2.12% ties Sprint's best first quarter churn performance since the merger. We expect to complete the Helio decommissioning in the second quarter and this will have a negative impact on second quarter post-paid churn by 6 to 8 basis points. But, we still expect that post-paid churn will be lower in the second quarter.
The second is brand, second priority. In part of our confidence in churn comes from the continuing improvement in Sprint's brand metrics. We're making significant strides in strengthening the Sprint brand among the customers of each of the major wireless carriers our MWI or most want to investigate score has improved more for Sprint than for any competitor.