Sprint Nextel, the third largest mobile operator in the US, is losing more customers and more money than most analysts expected.

During 3Q 2008, Sprint’s subscriber base shrank by 1.3 million, of which 1.1 million were post-paid subscribers closing their accounts. According to five analysts surveyed by Reuters, the average expected post-paid subscriber loss for Sprint during 3Q 2008 was one million.

Sprint’s 3Q 2008 revenue fell, year-on-year, by 12 percent to $8.81bn, which was slightly below the average estimate of $8.86bn generated by Reuters’ analyst survey. The company also posted a net loss of $326m, or 11 cents a share, during 3Q 2008. By contrast, during 3Q 2007, Sprint managed a net profit of $64m (two cents per share). 

A comparatively poor quality network, along with customer service shortcomings, has contributed heavily to Sprint’s woes.  “We have yet to turn the corner,” Dan Hesse, Sprint CEO, said in a conference call with analysts.

To address investors’ concerns about the company’s debt, Sprint has renegotiated the terms of its revolving credit facility, which gives it breathing space (until 2010) before the new credit facility expires. As part of the new agreement, Sprint paid down $1bn of its outstanding loan and decreased the current borrowing capacity of the credit facility from $6bn to $4.5bn, of which $1.3bn is available.

The good news for Sprint is that the FCC recently approved the proposed New Clearwire joint venture in which it will hold a 51 percent stake. The mobile operator appears to have backtracked on its plans, however, to sell off its iDEN network.