Dan Hesse, chief executive officer at Sprint Nextel Corp. for less than five months, faced tough questions Tuesday about the company's continued trouble keeping wireless subscribers. Overland Park, Kan.-based Sprint, the nation's third-largest wireless provider, lost about a million customers in 2007 and reported Monday that it lost 1.07 million more in the first quarter of 2008 alone. "Over the last year, AT&T and Verizon have really been eating our lunch, particularly in terms of high-value customers," investor Carlos Roberts of McLean, Va., told Hesse at the company's annual shareholder meeting. Roberts asked Hesse what he was doing about that problem.

Hesse, hired in December after the company's board ousted former CEO Gary Forsee, told Roberts and other shareholders that Sprint Nextel is taking the appropriate steps to regain momentum on subscriber numbers.

But he cautioned that shareholders shouldn't expect significant improvement in the company's finances until the end of 2008.

"Improving our performance will take time," he said.

Chairman James Hance Jr. placed the blame where many already have - on Sprint's struggle to integrate Nextel Communications Inc.'s network and corporate culture with its own after it bought Nextel in 2005.

"Over the course of merging Sprint and Nextel, we lost our focus on how we attract, serve and retain our customers," Hance said. "As a result, we lost ground to our competitors. Too many good customers have walked out the door unhappy with us."

Hesse said the company will focus on retaining high-quality customers through improved customer service and special offers for existing customers. For example, it plans to roll out a device like Apple Inc. s iPhone, called the Instinct, in June and sell it initially only to existing customers.

Sprint also continues to weed out subscribers who have trouble paying their bills and don't spend much on lucrative data services such as Internet surfing or video.

"In the short term, this increased selectivity will probably dampen new customer volume," Hesse said. "However, we're confident that the tradeoff of long-term value will be the right one for our shareholders."

Hesse said Sprint is seeking devices and services that will distinguish its brand from those of rivals AT&T Mobility and Verizon Wireless.

A chief new distinction is the company's partnership, announced last week, with Clearwire Corp. to sell high-speed wireless broadband services using WiMax technology. WiMax is similar to the WiFi service found in coffee shops, airports and many homes in that it promises download speeds far faster than current wireless networks for video, games and other data services, but WiMax covers much larger areas than WiFi.

Hesse said AT&T and Verizon, which are pursuing a different technology, are "at least" two years behind Sprint.

"Sprint will be the only wireless carrier providing landline-level capability to mobile customers," he said.

Roberts, who bought Nextel stock in 1994, said he was still amazed at what a "disaster" the combination of Nextel and Sprint has been. The company reported an annual loss last year of $29.5 billion after writing off much of the remaining value of the Nextel purchase.

But he said after the meeting that he was willing to give the new CEO some leeway.

"They're turning around an aircraft carrier here, not a small boat," Roberts said. "But he doesn't have unlimited time. If the numbers don't start coming in good in 2009...."

Roberts left the thought open-ended.

Fellow shareholder Gilbert Flaming of Silver Springs, Md., said Hesse will need "a good couple years" to pull off the turnaround. But he was optimistic there was enough growth in the overall wireless market to keep Sprint afloat.

"I think you can be a minority player in the market and still be profitable," Flaming said.

Sprint shares were down 19 cents, more than 2 percent, to $9.05 in midday trading Tuesday.

Written By DAVID TWIDDY

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