Sprint - Nextel 2014 Annual Report Download - page 46

Table of Contents
44
Subscriber Results
Sprint Platform Subscribers
Retail Postpaid — During the Successor year ended March 31, 2015, net postpaid subscriber losses were 212,000
as compared to net losses of 96,000 in the Combined year ended December 31, 2013 and net additions of 1,516,000 in the
Predecessor year ended December 31, 2012, inclusive of 1,334,000, 564,000 and 76,000 net additions of tablets, respectively,
which generally have a significantly lower ARPU as compared to other wireless subscribers. During the Successor three-
month transition period ended March 31, 2014, net postpaid subscriber losses were 231,000 as compared to net additions of
12,000 in the Predecessor three-month period ended March 31, 2013, inclusive of 516,000 and 16,000 net additions of tablet
devices, respectively. The primary driver for the net losses in the Successor year ended March 31, 2015, the Successor three-
month transition period ended March 31, 2014 and the Combined year ended December 31, 2013 was an increase in churn,
primarily due to increased competition and network-related churn impacted by our network modernization program. Other
wireless carriers continue various aggressive marketing efforts, including price reductions, to incent subscribers to switch
carriers. As a result, we believe these efforts are also negatively impacting churn, which has a negative effect on earnings.
The change to net losses in the Combined year ended December 31, 2013 from net additions in the Predecessor year ended
December 31, 2012 was also impacted by the absence of Nextel platform recaptures in the second half of 2013 as the
shutdown of that network was completed on June 30, 2013. Nextel platform and U. S. Cellular recaptures in the Combined
year ended December 31, 2013 totaled 734,000.
Retail Prepaid — During the Successor year ended March 31, 2015, we added 449,000 net prepaid subscribers as
compared to adding 488,000 and 2,305,000 net prepaid subscribers in the years ended December 31, 2013 (Combined) and
December 31, 2012 (Predecessor), respectively. Net additions in the Successor year ended March 31, 2015 is primarily due to
subscriber growth in our Boost brand as a result of new promotions in our indirect channels, partially offset by subscriber
losses in the Virgin Mobile prepaid brands primarily due to continued competition. During the Successor three-month
transition period ended March 31, 2014, we lost 364,000 net prepaid subscribers as compared to adding 568,000 in the
Predecessor three-month period ended March 31, 2013, primarily due to the timing and impact of churn related to the annual
recertification of Assurance Wireless subscribers occurring earlier in calendar year 2014 compared to calendar year 2013,
combined with a decline in gross subscriber additions across all prepaid brands. In combination with the significant impact of
reduced subscriber additions due to the Assurance Wireless recertification, our decline in net additions in the Combined year
ended December 31, 2013 compared to the Predecessor year ended December 31, 2012 was also due to continued
competitive pressures in 2012 resulting in promotional offerings that drove increased net additions. Also contributing to the
decline in net additions in the Combined year ended December 31, 2013 was the absence of Nextel platform recaptures in the
second half of calendar year 2013 as the shutdown of that network was completed. Approximately 168,000 prepaid
subscriber additions deactivated service on the Nextel platform in the Successor year ended December 31, 2013 as compared
to 620,000 in the Predecessor year ended December 31, 2012.
The federal Lifeline program under which Assurance Wireless operates requires applicants to meet certain
eligibility requirements and existing subscribers must recertify as to those requirements annually. New regulations in calendar
year 2012, which impact all Lifeline carriers, impose stricter rules on the subscriber eligibility requirements and
recertification. These new regulations also required a one-time recertification of the entire June 1, 2012 subscriber base by
December 31, 2012. Accounts of subscribers who failed to respond by December 31, 2012 were suspended and made subject
to our prepaid churn rules as described below (or 365 days in a limited number of states). However, subscribers could re-
apply prior to being deactivated and also had the ability to receive by-the-minute service at their own expense. We
deactivated the accounts of approximately 1.2 million subscribers in the quarter ended June 30, 2013 primarily related to the
recertification process.
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 include subscribers engaged in these retention
programs, however, the number of these subscribers as a percentage of our total prepaid subscriber base has remained
consistent over the past four quarters. Assurance Wireless and Clearwire subscribers are excluded from these targeted
retention programs.
Wholesale and Affiliate Subscribers — Wholesale and affiliate subscribers represent customers that are served on
our networks through companies that resell our wireless services to their subscribers, customers residing in affiliate territories