Sprint’s net additions
In the prior parts of this series, we saw that Wall Street analysts are anticipating the falling trend in Sprint’s wireless revenue to continue in 1Q15. We also saw that the decreasing unit contribution of Sprint’s postpaid customers is expected to negatively affect the segment’s revenue in 1Q15.
In this part of the series, we’ll look at another critical factor that will negatively impact the year-over-year performance of Sprint’s postpaid segment. In 1Q15, Wall Street doesn’t expect Sprint to recuperate fully from its subscriber losses of 2Q14 and 3Q14.
As you can see in the above graph, Sprint lost ~355,000 postpaid subscribers in 2Q14 and 3Q14. However, the carrier was able to turn to positive postpaid net additions of ~170,000 in 4Q14.
Based on Wall Street analyst consensus as of July 24, 2015, Sprint’s net additions in the postpaid segment are expected to be ~163,000 in 1Q15. This is a significant year-over-year improvement considering Sprint lost ~245,000 postpaid customers in 1Q14. Nonetheless, an overall smaller postpaid customer base in 1Q15 will still negatively affect Sprint’s revenue during the quarter.
Sprint’s net additions in the postpaid phone category
Sprint did add postpaid customers in 4Q14. However, the carrier continued to lose sought-after postpaid phone customers. These customers include smartphone users.
Users of smartphones such as Apple’s (AAPL) iPhones or Google’s (GOOGL) (GOOG) Android phones tend to use more data. So they generate more value for wireless carriers, including Sprint, AT&T (T), Verizon (VZ), and T-Mobile (TMUS).
A lower number of postpaid phone users in 1Q15 should negatively affect Sprint’s wireless revenue.
You can take exposure to Sprint while diversifying risk by investing in the iShares Russell 1000 ETF (IWB) or the iShares Russell 1000 Value ETF (IWD). IWB held ~0.02% in Sprint as of June 30, 2015. Sprint contributed ~0.03% of IWD’s holdings on the same date.