Sprint's (NYSE: S) Q2 earnings report may have shown the first rise in wireless subscribers for the first time in three years, but the service provider's wireline segment results shows the common challenge that all incumbent carriers face as their customers transition away from the cash cow TDM-based services to IP.
The wireline numbers speak for themselves. During the second quarter, Sprint's wireline revenues declined 11 percent year-over-year to $1.3 billion, a factor it attributes to "customer migrations from legacy data to lower rate IP services." Wireline revenues were sequentially two percent lower because of voice volume reductions.
But the IP transition is again showing some positive signs for the IXC. Sprint's overall operating wireline expenses segment improved 14 percent year-over-year due to cost declines of service as IP becomes a bigger portion of the wireline base and improvement in SG&A expenses.
One IP-based service that Sprint did get serious about in the most recent quarter was Ethernet. Although Sprint clearly trails the rest of the service provider community in terms of Ethernet access availability, a growing demand from its customer base for 10 Mbps connections to its IP/MPLS network drove it to start an aggressive Ethernet expansion campaign. Sprint's Ethernet expansion effort will not only bring service into 16 additional U.S. new markets this year, but it is also expanding its IP/MPLS coverage in South America and Asia-Pacific.
- see the earnings release here
- see FierceWireless' coverage here
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