Sprint Nextel Corporation (S)
Q2 2010 Earnings Call Transcript
July 28, 2010 8:00 am ET
Yijing Brentano – VP, IR
Dan Hesse – CEO
Bob Brust – CFO
Dan Schulman – President, Prepaid Group
Jason Armstrong – Goldman Sachs
Michael Rollins – Citigroup
John Hodulik – UBS
Mike McCormack – JPMorgan
Phil Cusick – Macquarie Research Equities
Dave Barden – Bank of America
Brett Feldman – Deutsche Bank
Ric Prentiss – Raymond James
Simon Flannery – Morgan Stanley
Previous Statements by S
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Good morning. My name is Vishiara, and I will be your conference operator today. At this time, I would like to welcome everyone to the 2010 second quarter Sprint earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session.
Now, with it I’d like to turn the call over to Yijing Brentano, Vice President of Investor Relations. Sir, you may begin.
Thank you, Vishiara. Good morning and welcome to Sprint Nextel’s second quarter 2010 earnings call. Thanks for joining us this morning. For the format of the call, Dan Hesse, our CEO, will discuss operational performance in the quarter. Then our CFO, Bob Brust, will cover the financial aspects of the quarter.
Before we get underway, let me remind you that our release and the presentation slides that accompany this call are both available on the Investor Relations page of the Sprint website.
Slide two is our cautionary statement. I want to point out that in our remarks this morning we will be discussing forward-looking information, which involves a number of risks and uncertainties that may cause actual results to differ materially from our forward-looking statements.
We provide a comprehensive list of risk factors in our SEC filings, which I encourage you to review, including our Form 10-K for the year ended December 31, 2009.
Turning to slide #3; throughout our call, we will refer to several non-GAAP metrics. Reconciliation of our non-GAAP performance and liquidity measures to the appropriate GAAP measures for the second quarter can be found on the attachments to our earnings release and also at the end of today’s presentation, which are available on our website at www.sprint.com/investors.
Next, I would like to cover our EPS results. Basic and diluted loss per common share for the second quarter was $0.25 compared to $0.29 in the first quarter 2010 and $0.13 in the year-ago period.
Approximately, $0.10 of the second quarter 2010 loss per share was due to an increase in valuation allowance on deferred tax assets, resulting from net operating loss carry forwards generated during the second quarter. The impact was about $0.12 in the first quarter. Bob will discuss this further in his remarks.
I will now turn the call over to Sprint CEO, Dan Hesse.
Thank you, Yijing and good morning and thanks for joining us so early on a summer day, especially those of you who might be on vacation.
As you can see from Slide #4, Sprint had a solid second quarter. We grew total wireless subscribers by 111,000 in the quarter, driven by Sprint’s best postpaid churn performance ever, and we’ve been in the wireless business for almost 14 years now.
Our efforts to improve the customer experience by being simple to do business with are paying off and like last quarter we can again report sequential stability in revenues, adjusted OIBDA and OIBDA margin and strong free cash flow.
As I do on each call, I will organize my comments along the lines of Sprint’s three consistent overarching objectives, improving the customer experience, strengthening the brand, and generating cash flow.
Please go to Slide #5. With respect to the customer experience, I am very pleased to report that we achieved our 10th consecutive quarter of improvement in customer care satisfaction and in first call resolution last quarter.
As a result of this 2.5 year company-wide obsession with improving the customer experience, the 2010 American Customer Satisfaction Index, which some of you may know as the comprehensive University of Michigan customer satisfaction study reported that over the past two years, Sprint has not only improved far more than any U.S. wireless carrier, but Sprint’s customer satisfaction has improved more in the past two years than any U.S. company in the survey from any industry.
The ACSI is not alone. Recently, I was invited to New York to keynote the Forrester’s Customer Experience Forum 2010 Conference in recognition of Sprint’s significant customer service improvements over the past year. In the Forrester Customer Experience Index, Sprint improved 15 points, while no other U.S. wireless carrier improved more than one point and Sprint’s improvement tied for the greatest improvement achievement of any U.S. company in any industry.
Also in the quarter, Sprint received the Gartner 1to1 Media CRM Excellence Award as one of five Gold medal winners. Gartner’s CRM Excellence Award honors outstanding organizations that use customer-focus strategies to improve their business performance.
In addition, the J.D. Power Wireless Business Satisfaction survey recognized Sprint recently as the only carrier to see its scores improve in the small/mid-size business category in each of the 2008, 2009 and 2010 surveys. Earlier this year, the Yankee Group recognized Sprint as the number one in voice satisfaction and number one in data satisfaction among large business customers.
Please go to Slide #6. Our internal metrics mirror these results. In the quarter, blocked calls on our network achieved an all-time best. In a well-known third-party survey, customers gave Sprint, our highest rating ever in network satisfaction.