Sprint's Q2 wireline revenues decline 9% to $1B

Sprint (NYSE: S) wireline business continues to struggle as second-quarter revenues declined 9 percent to $1 billion year-over-year.

The service provider attributes the wireline revenue decline to two factors: intercompany rate reduction based on prices for voice and IP services sold to the wireless segment, and the ongoing migration of cable VoIP customers off its IP platform. On a sequential basis, wireline revenues were flat.

Wireline net operating revenues declined about 4 percent year-over-year to $950 million due to lower cost of service from continued declines in voice and cable IP volumes and improvement in SG&A expenses. On a sequential basis, net operating expenses rose 3 percent as a result of cost of service.

Despite the slow quarter, the service provider did make some progress with a number of key wireline/wireless initiatives, including the expansion of its Ethernet and cloud service portfolios.

In the cloud services domain, introduced a new wholesale cloud service offering for its reseller channel and developed a relationship with CSC to deliver Infrastructure as a Service (IaaS) capabilities to existing and new business service customers.

The service provider was no less aggressive with its Ethernet rollout. During the quarter, it announced it would expand its Ethernet coverage to 143 domestic and 38 international countries by the end of the year.

All of these services will, of course, be supported by its growing IP and optical network. One initiative Sprint took on during the quarter was to incorporate Ciena's (Nasdaq: CIEN) coherent optical technology into its core network to support 40G and later 100G and 400G capabilities to support its growing base of wireless data and enterprise communications traffic.

From an overall company financial perspective, Sprint reported that company net operating revenue rose to $8.84 billion from $8.31 billion, but reported that its losses widened to $1.37 billion.

For more:
- see the earnings release

Special report: Wireline in the second quarter of 2012

Related articles:
Sprint joins with CSC to take on IaaS market
Sprint moves into the cloud-based unified communications service arena
Sprint announces wholesale cloud for SMB resellers
Sprint sets aggressive domestic, international Ethernet expansion effort
Sprint paves 100G, 400G optical network core path with Ciena