RealTime IT News

Sprint Falls Back on PCS Side of the Business

With the long distance business still retrenching from the fixed wireless space, Sprint on Tuesday announced that its wireless business anticipates good results for 2002 with revenue projections showing an increase of more than 30 percent to approximately $13 billion and positive cash flow in a range of $3.0 to $3.1 billion.

"Our 3G rollout will extend our advantage within that industry," Sprint President Charles Levine told investors gathered at an annual meeting held in its headquarters in Overland Park, Kansas.

This year, revenues are expected to grow more than 50 percent to approximately $9.7 to $9.8 billion. In the fourth quarter revenues are expected to be $2.7 to $2.8 billion which would be more than 40 percent above the year-ago period. Revenue growth is expected to continue to be driven by strong gains in the customer base and strong average customer revenue. Monthly average revenue per customer is targeted to continue to be at the $60 plus level in 2002.

Full year 2001 EBITDA is expected to be around $1.6 billion. In 2000 EBITDA was approximately break-even. Growth in EBITDA in the coming year is expected to be driven by a growing customer base. PCS Group also has set a goal of achieving a 10 percent reduction in the average monthly cash cost to support a customer for 2002.

"I truly believe that the best is yet to come for the PCS Group," said William T. Esrey, Sprint's chairman and chief executive officer. "Our PCS operation has been the fastest-growing wireless carrier for more than three years. We have aggressive, but we believe attainable, growth and profitability objectives in 2002."

While Sprint cautioned that fourth quarter wireless industry results are traditionally highly dependent on consumer buying patterns during the holiday season, the upbeat remarks nonetheless were a stark contrast to Sprint's Oct. 17 announcement to exit its fixed wireless Multichannel Multipoint Distribution Services (MMDS) service known as the Integrated On-Demand Network (ION) in an effort to reduce operating costs to business units in its FON Group tracking stock. Sprint said it would have to lay off about 6,000 employees and 1,500 contractor positions as a result of the termination of ION.

Still, Sprint said it remains committed to wireless data services despite the failures of its MMDS venture. "Data services will be an increasingly important component of the wireless industry and our network was built with data services in mind. While we are in the very early stages of building this customer base, our PCS operation already has more than two million wireless data users. We expect this growth will accelerate as we move to higher data speeds with the introduction of third-generation wireless technology in 2002," Esrey said in his prepared remarks.

Meanwhile, the company continues to rely upon its FON business. Today, the company announced that online auction pioneer eBay signed an agreement with Sprint to use its Sprint E|Solutions Internet Center services to expand eBay's Web hosting facilities. The move allows eBay to have a back-up system geographically located outside the San Francisco Bay Area, ensuring continued site availability and improved disaster recovery.

Separately, Sprint also announced it has signed a multi-year contract with Metromedia Fiber Network to lease metropolitan area fiber in in Boston, Chicago, Dallas, Houston, Los Angeles, Newark, New York, Philadelphia, Seattle and Washington, D.C. While Sprint will initially use MFN's metropolitan fiber-optic infrastructure in these 10 major cities, the company will have the opportunity to expand into other markets by leasing dark fiber from MFN under terms in this agreement. Sprint expects to begin using MFN networks in initial markets in the second quarter of 2002 and in all 10 cities by the end of 2002.