Sprint - Nextel 2012 Annual Report Download - page 49

Table of Contents
Subscriber Results
In the first quarter of 2012, we formalized our plan to decommission the Nextel platform as part of Network Vision and expect to shut
- down
the Nextel platform by June 30, 2013. During 2012, we focused our efforts on recapturing Nextel platform subscribers to our ongoing Sprint platform.
As a result of these efforts, we successfully recaptured 55% and 33% of the postpaid and prepaid subscribers, respectively, that deactivated service
from the Nextel platform during 2012. As of December 31, 2012, we had approximately 2.1 million subscribers remaining on the Nextel platform. We
expect to recapture approximately 30
- 40% of the remaining Nextel platform subscribers on the Sprint platform. Accordingly, as we execute on the
planned shut
- down of the Nextel platform, we will continue to experience subscriber losses on the Nextel platform through June 30, 2013, the end of life
of the Nextel platform. In addition to our focused effort on Nextel platform recaptures, we will continue to focus on the retention of existing Sprint
platform subscribers as well as the acquisition of profitable subscribers to achieve growth on the Sprint platform.
The following sections, Sprint Platform Subscribers and Nextel Platform Subscribers, discuss the subscriber results by platform for each
annual period in the three
- year period ended December 31, 2012. This information should be read in conjunction with the prior section titled Average
Monthly Service Revenue per Subscriber and Subscriber Trends .
Sprint Platform Subscribers
Retail Postpaid — During
2012 , we added approximately 1.5 million net postpaid subscribers, as compared to adding 1.3 million and 734,000
net postpaid subscribers in
2011 and 2010 , respectively. Of the 1.5 million additions in 2012 , substantially all represented postpaid subscribers that
deactivated service on the Nextel platform primarily associated with our planned shut
- down of that network. Our increase in net postpaid subscribers
in
2011 as compared to 2010 is primarily related to increased subscriber gross additions. Our net postpaid subscriber additions for 2011 and 2010
include approximately 508,000 and 424,000 postpaid subscribers that were previously on the Nextel platform, respectively.
Retail Prepaid — During
2012 , we added 2.3 million net prepaid subscribers, as compared to adding 4.3 million and 3.6 million net prepaid
subscribers in
2011 and 2010 , respectively. Our decrease in net prepaid additions in 2012 as compared to 2011 was primarily due to a decline in gross
subscriber additions on Assurance Wireless due to lower response rates and a lower customer application approval rate resulting from complexities
associated with new federal regulations as well as an increase in churn primarily related to FCC mandated efforts to remove duplicate Lifeline accounts
between carriers. Our increase in net prepaid additions in
2011 as compared to 2010 was primarily attributable to net additions from the Assurance
Wireless brand primarily as a result of new market launches and increased advertising and promotions. Our net prepaid subscriber additions for
2012,
2011 and 2010 include approximately 620,000, 724,000 , and 907,000 prepaid subscribers that were previously on the Nextel platform, respectively.
The federal Lifeline program under which Assurance Wireless operates requires applicants to meet certain eligibility requirements and
existing subscribers must re - certify as to those requirements annually. New regulations in 2012, which impact all Lifeline carriers, impose stricter rules
on the subscriber eligibility requirements and re
- certification. These new regulations also required a one - time re - certification of the entire June 1, 2012
subscriber base by December 31, 2012. Subscribers who failed to respond by December 31, 2012 are subject to our prepaid churn rules as described
below (or 365 days in a limited number of states). However, subscribers can re
- apply prior to being deactivated and also have the ability to receive by -
the - minute service at their own expense. As a result, we expect deactivations of approximately 1.3 to 1.4 million subscribers, representing approximately
30% of ending period Assurance subscribers as of December 31, 2012, which is expected to primarily impact prepaid churn for the second quarter 2013.
Although we expect a significant reduction in Assurance subscribers as a result of the one
- time recertification process, our rate of recertification of
existing subscribers is consistent with our historical recertification rates.
Prepaid subscribers are generally deactivated between 60 and 150 days from the later of the date of initial activation or replenishment;
however, prior to account deactivation, targeted retention programs can be offered to qualifying subscribers to maintain ongoing service by providing
up to an additional 150 days to make a replenishment. Subscribers targeted through these retention offers are not included in the calculation of churn
until their retention offer expires without a replenishment to their account. As a result, end of period prepaid subscribers
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