US number-three mobile operator Sprint Nextel has reported a widening net loss for second-quarter 2009, despite a significant increase in its prepaid customer base. Sprint’s net loss widened to US$384 million (US$0.13 a share), compared to a loss of US$344 million (US$0.12 a share) a year earlier. Excluding unusual items, Sprint’s loss would have been US$0.04 a share compared with analysts’ average expectation for a loss of US$0.01 a share, according to Reuters Estimates. Revenues declined 10 percent to US$8.1 billion in line with analysts’ average estimate in the Reuters poll. However, the company dramatically improved its free cash flow, generating US$676 million in the quarter compared to US$11 million a year ago. “In the second quarter, we made further progress on our efforts to enhance financial stability, improve the customer experience and reinvigorate the brand,” said CEO Dan Hesse, noting the exclusive launch of Palm’s Pre in June. 

The company said its mobile customer base stood at 48.8 million at the end of the quarter, compared to 49.1 million in 1Q09. This included 34.4 million postpaid (contract) subscribers, 5 million prepaid subscribers and 9.3 million wholesale and affiliate subscribers. Total mobile customers declined by 257,000. However, the figure disguised a 938,000 rise in its prepaid customer base driven by the success of its Boost Mobile subsidiary. The rise in prepaid was ahead of four analyst estimates that ranged from 500,000 to 900,000. Postpaid churn in the quarter was 2.05 percent compared to 2.25 percent in 1Q09 and 1.98 percent in the year-ago period; churn at Boost was 6.38 percent, compared to 6.86 percent in 1Q09 and 7.36 percent a year ago. The operator said it continues to expect both postpaid and total subscriber full-year losses to improve in 2009 compared to last year. Hesse said that 2Q09 saw “the best retail net add performance in the past seven quarters… However, we are not satisfied that we lost a quarter of a million customers in the quarter.” The firm announced yesterday it is to acquire MVNO Virgin Mobile USA for US$483 million, but the deal was not mentioned in its earnings release.