By Sinead Carew
Oct 30 (Reuters) - Sprint Corp posted a decline inthird-quarter revenue on Wednesday, losing more subscribers thanexpected following the shutdown of its older network, and warnedthat customer defections would remain high in coming quarters.
But investors shrugged off the results because they do notexpect big improvements at the No. 3 U.S. mobile operator untilthe second half of 2014 and the company did not change itsfinancial targets for full-year 2013. Shares rose 1.5 percent.
Sprint, which is 80 percent owned by SoftBank Corp,is revamping its network after years of customer losses.
Sprint reported net subscriber losses of 360,000 for thequarter. Six analysts contacted by Reuters expected losses ofroughly 313,000, on average.
By comparison, Sprint's biggest rival, Verizon Wireless added 927,000 subscribers in the quarter, and No.2 U.S. mobile provider AT&T Inc added 363,000. Smallerrival T-Mobile US Inc is due to report results Nov. 5.
Sprint said it suffered from service problems in the quarterdue to its work on the network as well as the expected loss ofcorporate customers due to the June shutdown of its iDennetwork, which was used mostly by business customers.
The iDen shutdown will hurt Sprint's subscriber numbers to alesser extend in the fourth quarter, according to ChiefExecutive Dan Hesse. But he told analysts on a conference callthat Sprint's customer defection rate, known as churn, wouldcontinue to be at high levels into the middle of 2014, when thecompany expects to complete much of its network overhaul.
Sprint, whose churn rate was 1.99 percent in the thirdquarter, is working on raising data speeds and adding capacityfrom spectrum previously used by the iDen network and fromspectrum from Clearwire Corp, which it bought out in July.
Sprint did not give any timetable for when it could returnto net customer growth.
Roe Equity Research analyst Kevin Roe said Sprint's resultswere mostly in line with his low expectations.
"This is a very challenging transition period for Sprint andso the focus is on 2014," Roe said.
Investors hope Sprint will compete better after the networkupgrade and with financial backing from Japan's SoftBank, whichbought a controlling stake in Sprint for $21.6 billion in July.SoftBank founder Masayoshi Son has been praised by analysts andinvestors for quickly turning around his company's Japanesemobile operations.
One hope is that Sprint will eventually massively boost itsnetwork and offer customers far more capacity than its biggerrivals at a cheaper price because of its Clearwire deal, whichbrought vast amounts of wireless airwaves.
Analysts have been especially anxious for Sprint to revealits plans due to concerns it could spend a lot more thanexpected on integrating the spectrum.
Sprint said on Wednesday it expects to integrate theClearwire spectrum into its network in markets with a populationof 100 million people by the end of 2014.
It's an indication we'll continue to maintain our disciplineon capital spending," Chief Financial Officer Joe Euteneur toldReuters after the earnings conference call, without revealingSprint's spending plans for 2014.
CEO Hesse said the company, which is well behind biggerrivals in upgrading its network, was on track to installhigher-speed Long Term Evolution technology in markets with 200million people by the end of 2013.
Hesse also promised to give investors details of"groundbreaking" advances in network and handset technology atan event later on Wednesday at a company research laboratorynear San Francisco.
Sprint reported a third-quarter profit of $383 million,compared with a loss of $767 million in the year-ago period,before its SoftBank and Clearwire deals.
The company said the latest quarter was helped by aone-time, non-cash, $1.4 billion gain, net of taxes, related toits previously held investment in Clearwire. It did not reportearnings per share because of the SoftBank deal.
Revenue fell to $8.68 billion from $8.76 billion.
Sprint still expects 2013 adjusted earnings before interest,taxes, depreciation and amortization of between $5.1 billion and$5.3 billion, including the dilutive effects of the SoftBank andClearwire transactions. It also stuck by its target of 2013capital expenditures of about $8 billion.
Sprint shares were up 10 cents, or 1.5 percent, at $6.78 inlate-morning trade on the New York Stock Exchange.
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