RealTime IT News

Sprint Still Bullish On Wireless Phones

Officials at the fourth-largest digital wireless phone carrier in the U.S. reaffirmed Wednesday their expectations for 2002, saying the expected addition of three million new digital phone users would help boost profits and aid in their goal to become cash-flow positive by the end of the year.

Sprint still has hope for its digital wireless phone division, and as such, has promised to spend $3.4 billion in 2002 on system improvements, coverage expansion and customer acquisition.

It's a signal the carrier's executives are becoming increasingly aware of the importance 2G and 3G wireless phone service will play down the road.

In the past, Sprint leaders relied heavily on the company's long-distance dominance at the expense of its fledgling wireless phone deployment. With the demise of its fixed wireless venture last year, Sprint has indicated more heartfelt support of its next-generation phone service.

Last week, Sprint officials announced they would reduce capital expenditures for its long distance unit from $3.4 billion to $3 billion.

It's a bit of good news for Sprint shareholders, who had nothing to smile about in 2001, with both digital wireless phone and long distance divisions faring poorly.

In 2001, PCS had net losses of $1.26 billion (a reduction from 2000, but offset by higher operating expenses), while the FON division (Sprint's bread-and-butter operation) posted 2001 losses of $139 million and a revenue drop of four percent.

Officials expect 2002 to be a better year, however. In the PCS division, Sprint expects its digital wireless phone division to garner $3 billion in earnings before interest, taxes, depreciation and amortization (EBITDA), while its long-distance division will post $4.6 billion EBITDA.

The figures are in line with expectations announced last December, but executives likely felt their investors would want some assurance after recent difficulties.

Sprint is just now reaffirming its goals for 2002, after having secured the means to continue operations with the addition of a $1 billion credit facility to pay off short-term debts, putting its directory-publishing business up for collateral. Officials say the loan amount meets all cash requirements for 2002, barring future problems.