Sprint Added Subs For The First Time In Three Years — No Thanks To Nextel

The second quarter marked the first time in three years that Sprint (NYSE: S) Nextel added overall subscribers on a quarterly basis.

Sprint also set a five-year record in the second quarter when it added more gross subscribers to its top line than any other period since 2005. However, Sprint’s CDMA network is doing all the heavy-lifting. It gained 638,000 customers, which offset the 465,000 net losses in Nextel’s iDEN business.

The subscriber additions were mostly generated from strong smartphone sales, including the HTC EVO 4G — it’s first phone running on the faster speed network — and the BlackBerry Curve, and by keeping the company’s churn low at 1.85 percent for contract customers.

In the second quarter, the company lost $760 million on operating revenues of $8 billion. The net loss includes a non-cash charge of $302 million. Still, the company generated $709 million of free cash flow in the quarter, and reported cash and cash equivalents of $4.3 billion.

In a research note, Credit Suisse Analyst Jonathan Chaplin said the dip in margins was expected, and that generally he believes that Sprint’s “turn-around has happened,” and he sees Sprint returning to growth this year.

Indeed the quarterly subscriber additions don’t appear to be a fluke. Sprint Nextel is forecasting to add subscriber additions for the remainder of the year, as well, and to record fewer net postpaid subscriber losses in the second half. In a statement, Sprint’s CEO Dan Hesse, said: “Our intense focus for the past ten quarters on improving the customer experience, strengthening our brands, and generating cash are paying off…We feel we can confidently improve our subscriber forecasts for the second half of 2010 and deliver positive total net wireless subscriber additions for the remainder of the year.”