Net operating revenue
As we mentioned in Part 1, the net operating revenues for Sprint Corporation (S) decreased by 9% year-over-year (or YoY) to $8.02 billion in 1Q15, compared to $8.78 billion in 1Q14 due to lower wireless and wireline service revenues as well as lower equipment revenues.
Sprint’s revenues also declined 3% on a quarter-over-quarter (or QoQ) basis by $255 million due to lower revenues in the equipment and wireless revenue segments, as seen in the below chart.
Wireless Service segment
The Wireless Service segment of Sprint generated revenues of $6.6 billion in 1Q15, a decrease of 8% YoY, mainly due to a lower postpaid customer base and lower rate plans offered with device financing options. Revenues declined 1% QoQ as well.
Wireless Equipment segment
This segment generated revenues of $990 million in 1Q15. It declined by $116 million YoY and $154 million QoQ. The YoY decline was attributed to a shift from billing sales, as we explained earlier. The QoQ decline was due to lower non-lease sales volumes offset by higher revenues from leased devices.
This segment generated revenues of $630 million for 1Q15 in comparison to $746 million in 1Q14 and $668 million in the prior quarter. The decline in YoY and QoQ revenues were driven by lower voice rates and volumes, as well as annual intercompany rate reduction based on market prices for voice and IP services.
In addition to a decline in revenue in the above segments, Sprint saw a decline in average billings per user (or ABPU) by 3% YoY to $61.67 in 1Q15. This decline was primarily due to a higher mix of tablets, which have a lower monthly recurring charge compared to phones, and a shift to lower price rates offered with device financing options.
The prepaid average revenue per user (or ARPU) of $27.81 for 1Q15 increased $0.43 YoY and $0.31 QoQ. The year-over-year and sequential increases were primarily driven by changes in the mix of the firms’ customer base among its prepaid brands, partially offset by pricing changes in the Boost brand.