Sprint 4Q09 Preview

Sprint is scheduled to report 4Q09 results on Wednesday Feb. 10th prior to the market open. Conference call is at 8:0am.

Consensus is calling for revenues of $8 billion, Adj. EBITDA of $1.41bn, 17.6% margin, and GAAP EPS of ($0.19). For the shares to rally, revenues should top $8.30billion, Adj. EBITDA should exceed $1.5 billion, and GAAP EPS should come in above ($0.12).

On the wireless side, expectations are for service revenues of $6.4 billion, service EBITDA of $1.10billion, 17.2% margin, and total net adds of (10k). Service EBITDA should decline by 300bps from 4Q08 due to competition for postpaid subscribers. Downward pressure on voice margins due to the intense competitive landscape also contributes to the margin decline. We expect postpaid net adds to continue to decline, pre-paid net adds to grow but at a decelerating pace, and churn to stabilize.

The wireline business should see revenues of $1.4 billion and EBITDA of $340 million.

As per 2010 guidance, we expect management to highlight cost saving efforts through the announced layoffs, expectations for a moderation in capex spend, and potential for free cash flow growth. We expect continued net add subscriber losses of 400k with the mix constituting of a pre-paid net gain of 1.8 million subscribers and a postpaid net loss of 2.2 million subscribers.