Sprint Nextel's Revenue Falls

The churn rate of more traditional post-paid subscribers was 2.45%, well above that of rivals AT&T (T Quote) and Verizon (VZ Quote)

On the positive side, wireline revenue rose 2% from a year ago to $1.63 billion. Sprint said the growth was driven by IP services, which increased 44% annually and 9% sequentially.

Looking ahead, Sprint Nextel predicted continued downward pressure on post-paid gross additions over the next few quarters. "We expect these financial metrics will begin to stabilize towards the end of this fiscal year. In the second quarter of 2008, we expect to report an improved post-paid customer churn rate and net post-paid subscriber losses to improve marginally from the first quarter," the company said.

Sprint offered few comments on a torrent of news items that boosted its stock price over the last week. Leading up to the first-quarter results, Sprint's management had to contend with rumors that rival Deutsche Telekom (DT Quote) was considering a bid to acquire the company.

At the same time, rumors surfaced that Sprint was mulling the sale or spinoff of its Nextel unit. Were that to happen, it would mean the dramatic failure of the $35 billion Nextel deal, which the company completed less than three years ago.

Then on Wednesday, Sprint and Clearwire (CLWR Quote) announced they have finally reached a $14.5 billion deal that will combine their respective WiMax wireless broadband businesses.