Earnings Preview: Sprint Nextel to report for 4Q

NEW YORK (AP) ? Sprint Nextel Corp., the third-largest wireless carrier in the U.S., reports its fourth-quarter results before the stock market opens Wednesday as a newly minted member of the exclusive club of U.S. wireless carriers that sell the iPhone.

WHAT TO WATCH FOR: For most of the time since Sprint bought Nextel in 2005, it has been losing subscribers from its contract-based plans, which are the most lucrative. It has also been losing money, posting net losses 16 quarters in a row.

For the fourth quarter of 2011, analysts expect Sprint to break the trends of subscriber losses, thanks to the iPhone, which the company started selling in October. James Ratcliffe at Barclays Capital expects Sprint to report adding a net 270,000 subscribers on contract-based plans, and Kevin Smithen at Macquarie Capital puts the figure at 166,000.

In the last four years, Sprint has gained subscribers under contract in only one quarter ? the fourth quarter of 2010 ? while Verizon Wireless and AT&T have flourished.

The question is what price Sprint will be paying for entry into the iPhone club. Sprint needs to subsidize each phone by hundreds of dollars to get the price down to $99 or $199, depending on the model. It’s also had to commit to buying $15.5 billion worth of iPhones over four years, according to its chief financial officer.

Sprint also needs to spend billions to upgrade its wireless network to “4G” speeds. It’s buying access to Clearwire’s network right now for 4G service, but it uses a technology that’s been left behind by the industry. Both Clearwire and Sprint now need to upgrade to keep pace with the demand for wireless data.

These two issues mean that analysts expect Sprint to keep losing money this year, and probably into 2013.

On the positive side, AT&T has called off its attempt to buy No. 4 wireless carrier T-Mobile USA. Sprint vehemently opposed the deal, which was scuttled by regulators. There’s a scramble to figure out where the industry goes next, and rumors have surfaced that Sprint and T-Mobile might share network resources to help with the upgrade process.

WHY IT MATTERS: Sprint has 53 million wireless subscribers, and its struggle to keep them affects pricing on other carriers. Sprint also owns most of Clearwire Corp., which is building a nationwide wireless broadband network.

WHAT’S EXPECTED: Analysts surveyed by FactSet expect Sprint to report a loss of 38 cents per share on revenue of $8.7 billion.

LAST YEAR’S QUARTER: Sprint reported a loss of $929 million, or 31 cents per share, on revenue of $8.3 billion.