Sprint reports $29.5 billion loss after Nextel writedowns
29 Feb 2008
Mumbai: US mobile phone company Sprint Nextel has reported a $29.5 billion loss after writing down the value of its acquisition of Nextel Communications in 2005 and subscriber losses in the fourth quarter.
Sprint, the third largest US mobile phone company, said it lost $29.7 billion in goodwill impairment and had to write down nearly all of Nextel's value, which it acquired for $36bn three years ago.
Sprint, which had been struggling with integration and customer defections since it acquired Nextel, had since been losing ground to larger rivals AT&T Mobile and Verizon Wireless.
The company recorded a further $279m loss in other charges in the fourth quarter.
Sprint Nextel said it expected an increase in churn rates of post-paid wireless phone services and a fall in subscribers of about 1.2m customers in the current quarter.
Goodwill is the "premium paid over the fair value of the net tangible and intangible assets we acquired in business combinations," Sprint said.
Sprint said it was moving to reduce refinancing risk by borrowing funds from a revolving credit facility and would stop issuing a dividend for the foreseeable future. Sprint said it had borrowed $2.5 billion to raise cash.
Sprint reported a loss of $10.36 per share compared with net income of $261 million or 9 cents per share a year ago.
