Sprint to 'narrow' geographic focus if T-Mobile merger fails

Profits at Sprint Corp. cratered in the three months through March after the firm lost more phone customers than expected, results that come as the company warns it's on an unsustainable path without Trump administration approval for its $26.5 billion merger with T-Mobile.

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The firm is anticipating rolling out its national fifth generation wireless network in the coming weeks in cities, including Chicago, Atlanta and Dallas, it said in a statement on Tuesday.

AT&T and Verizon have already launched their own 5G networks. T-Mobile and Sprint -- the third- and fourth-largest carriers in the U.S., respectively -- say a merger is necessary in order to compete against the two firms on the rollout of the technology that promises to provide broadband speeds without a hardwired connection.

Sprint has also said it will be unable to compete in the U.S. wireless market if the transaction is not approved by the Department of Justice and Federal Communications Commission.

Should the merger fail to pass federal muster, the company would be forced to narrow its geographic focus and become less of a national carrier, CEO Michel Combes told investors.

"While we've made progress, there are certainly continued challenges to address, which will continue to put pressure on our service revenue and retail customer growth,” Combes said in a statement.

Companywide, Sprint lost $2.17 billion in the quarter, or 53 cents per share, a more significant decrease than Wall Street expected. Revenue rose to $8.4 billion, higher than analyst predictions.

The Overland Park, Kansas-based company lost 189,000 postpaid phone customers, or those who pay a monthly service bill, far exceeding estimates.

Service revenue grew 1 percent year-over-year, but the expected continued decline in postpaid wireless users in 2019 will "put pressure on postpaid service revenue" this year, Combes told investors. 

Sprint’s overall postpaid users grew by 169,000, though predominantly a result of a promotion.


The company previously told the FCC that recent postpaid additions were a result of offerings for "free lines" and are not a substitute for a "realistic analysis" of its overall performance.

On Tuesday, Combes clarified that those comments were "referencing the way we market to customers, but doesn't necessarily mean those customers are paying zero dollars for their service."