The comparison between Christmas 2012 and Christmas 2011 is cruel for Sprint (S). Sprint just reported that it sold 2.2 million iPhones during the Christmas quarter of 2012, 38% of which to new Sprint customers. This sounds fairly impressive. But the problem here is that in the Christmas of 2011, Sprint sold 1.8 million iPhones, with 40% going to new Sprint customers. The iPhone performance simply isn’t improving fast enough to help Sprint in a meaningful way in its battle against the two-headed monster that is Verizon (VZ) and AT&T (T).
The key metric of how many iPhones are sold to customers coming from outside is actually slipping a notch. The vitally important number of net contract subscribers came in worse than markets expected once again. Sprint lost 243,000 instead of the expected 206,000. During the same quarter, AT&T gained nearly 800,000 new subscribers, while Verizon grabbed a heady 2.1 million.
Of course, Sprint is losing more than 600,000 Nextel contracts every quarter as it gets close to shutting down the obsolete iDEN network. So let’s focus on the core CDMA network of Sprint, the part of the company that offers the iPhone and is adding new contract subscribers every quarter. Going back to the Christmas quarter of 2011, Sprint’s CDMA network added 539,000 new subscribers, up from 453,000 a year earlier. Back then, Sprint was heading to the right direction. But in the Christmas quarter of 2012, the number of new Sprint contract subscribers fell right back to 401,000 – not only below the level of 2011, but also below the level of 2010.
And that was the pre-iPhone era. This is nothing short of tragic. Even when we choose to disregard the woeful Nextel shrinkage and the fact that only half of the exiting iDEN customers will stick with Sprint, the core subscriber growth is weak as a kitten. More than a year after the gigantic iPhone deal Sprint cut with Apple, the CDMA contract customer growth is below where it was when Sprint relied on HTC and Motorola. That’s just chilling. Softbank has a mountain to climb.