Sprint - Nextel 2013 Annual Report Download - page 41

Table of Contents
The table below summarizes ARPU for the combined consolidated results of operations for the year ended
December 31, 2013 , the Successor year
ended
December 31, 2013 , the Predecessor 191 - day period ended July 10, 2013, and the Predecessor years ended December 31, 2012 and 2011 . Additional
information about ARPU for each quarter since the first quarter
2011 may be found in the tables on the following pages.
_______________________
Successor Year Ended December 31, 2013 and Predecessor Years Ended December 31, 2012 and 2011
Postpaid ARPU for the year ended
December 31, 2013 as compared to the Predecessor period in 2012 increased primarily due to higher monthly
recurring revenues, including the $10 premium data add
- on charges for all smartphones and device protection fees, combined with other fee increases and a
reduction in the number of subscribers eligible for certain plan discounts due to policy changes and fewer customer care credits. The increase in postpaid ARPU
was partially offset by lower variable usage
- based revenues due to the popularity of unlimited plan options, combined with a lower revenue per subscriber
carried by subscribers acquired in the Clearwire and U.S. Cellular acquisitions and growth in sales of tablets, which also carry a lower revenue per subscriber.
We expect Sprint platform postpaid ARPU to decline during 2014 as a result of the launch of the Framily plan which was launched in January 2014 and Sprint
Easy Pay, however, we also expect reduced equipment net subsidy expense to offset these declines. Prepaid ARPU for the Successor year ended
December 31,
2013 as compared to the Predecessor year ended December 31, 2012 declined primarily as a result of the impact of purchase price accounting to eliminate
deferred revenues, partially offset by the impact of a higher revenue per subscriber carried by subscribers acquired in the Clearwire Acquisition.
Postpaid ARPU for 2012 increased as compared to 2011 primarily due to increased revenues from the $10 premium data add
- on charges for all
smartphones and increases in roaming and other fees. Prepaid ARPU declined for 2012 compared to 2011 primarily as a result of net additions of our Assurance
Wireless brand whose subscribers carry a lower ARPU, partially offset by an increase in ARPU for the remaining prepaid brands as subscribers are choosing
higher priced plans to take advantage of international offerings and the increased availability of smartphones. Average retail ARPU increased for 2012 compared
to 2011 primarily as a result of the increased postpaid ARPU which was partially offset by an increased weighting of average prepaid subscribers to average
retail subscribers which carry a lower ARPU.
Combined Year Ended December 31, 2013 and Predecessor Year Ended December 31, 2012
In addition to the explanations above, prepaid ARPU for the combined year ended
December 31, 2013 as compared to the Predecessor year ended
December 31, 2012 declined primarily as a result of a decrease in ARPU for our Assurance Wireless brand due to a lower number of active Assurance
subscribers as a percentage of the average number of Assurance subscribers, primarily as a result of the recertification process. This decrease was partially
offset by an increase in ARPU for primarily the Virgin prepaid brands as subscribers are choosing higher priced plans due to the increased availability of
smartphones. ARPU as it relates to our Assurance Wireless brand was also impacted as a result of the recertification process because those subscribers no
longer had a revenue impact after December 31, 2012, but continued to be included in the prepaid subscriber based until deactivation in the second quarter 2013.
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Combined
Successor
Predecessor
Year Ended
December 31,
Year Ended
December 31,
191 Days Ended
July 10,
Years Ended
December 31,
2013
2013
2013
2012
2011
ARPU(1) :
Postpaid
$
63.29
$
63.46
$
63.10
$
60.84
$
57.27
Prepaid
$
26.62
$
26.64
$
26.57
$
26.72
$
27.40
Average retail
$
50.89
$
50.89
$
50.85
$
49.92
$
48.51
(1)
ARPU is calculated by dividing service revenue by the sum of the monthly average number of subscribers in the applicable service category. Changes in average monthly service
revenue reflect subscribers for either the postpaid or prepaid service category who change rate plans, the level of voice and data usage, the amount of service credits which are
offered to subscribers, plus the net effect of average monthly revenue generated by new subscribers and deactivating subscribers. Combined ARPU for 2013 aggregates service
revenue from the Predecessor191-day period ended July 10, 2013 and the Successor year ended December 31, 2013 divided by the sum of the monthly average subscribers
during the year ended December 31, 2013.