KANSAS CITY, Missouri. (AP) - Sprint Nextel Corp. swung to a fourth-quarter loss of $29.5 billion yesterday as it wrote down most of the remaining value of its 2005 purchase of Nextel Communications Inc. and continued to lose customers to competitors. It said it would quit paying dividends for the foreseeable future and was tapping a revolving credit line.

Shares of the nation's third largest wireless carrier tumbled more than seven percent in morning trading.

CEO Dan Hesse, who was hired in December to turn Sprint Nextel around, said the quarter was more difficult than he had expected and it could be some time before proposed operational changes have any effect.

On top of losing almost 700,000 valuable customers who have annual contracts during the fourth quarter, the company predicted it would lose another 1.2 million during the first quarter and would see additional losses in the second quarter.

"Our business is not performing well right now," Mr. Hesse told analysts during a conference call, blaming poor customer service in recent years. "We are working aggressively to turn this around but our financial performance will not improve overnight."

To counteract customer losses, Sprint Nextel said it would begin offering unlimited voice and data service usage for $99.99 per month. Unlimited voice only would cost $89.99 per month, undercutting $99.99 unlimited calling plans announced last week by rivals Verizon Wireless and AT&T.

Sprint Nextel also said that due to instability in the capital credit markets the company was borrowing $2.5 billion from a revolving credit facility and was not declaring dividends for the "foreseeable future."

Its shares fell 64 cents, or 7.2 percent, to $8.31 in morning trading trading after sinking to a new 52-week low of $7.75 earlier in the session.

Sprint, based in Overland Park, Kan., reported losing $29.5 billion, or $10.36 per share, during the quarter ending December 31. By comparison, Sprint Nextel earned $261 million, or nine cents per share, during the same period a year ago.

The company said last month it would likely have to write off most of the remaining $30.7 billion in goodwill value from the acquisition of Nextel and a number of affiliates. Sprint Nextel has struggled since the purchase, plagued by technical problems, unfocused marketing and a difficulty in merging the two companies' work forces into a cohesive whole.

Not including the write-down and other one-time charges, the company said it would have earned 21 cents per share before amortization, which was higher than the 18 cents per share expected by analysts surveyed by Thomson Financial.

Revenue during the quarter slipped six percent to $9.8 billion from $10.4 billion a year earlier, just missing analysts' expectations of $9.9 billion.

The company reported a net loss of 108,000 subscribers for the quarter as an increase in customers through its Boost pre-paid brand and wholesale channels partially offset the loss of 683,000 postpaid subscribers, who typically spend more on data services like texting and Web surfing.

Sprint Nextel reported quarterly postpaid churn, or the measure of these monthly customers dropping service, remained level at 2.3 percent and the average revenue per user declined about four percent from a year ago to $58.

Sprint Nextel said overall wireless revenues declined about six percent to $8.5 billion.

Mr. Hesse told analysts that the company would continue focusing on improving customer service and making its price plans and services easier for customers to understand.

"When I look at the company I see great assets...I also see a once strong brand which lacks relevance and a clear message," he said. "This will change."

Among those changes is the "Simply Everything" unlimited plan, which would include unlimited texting and web surfing and will even include offerings for which customers typically have paid a premium, such as video and navigational services.

Mr. Hesse said that while Sprint Nextel's price is lower than that of competitors, he views the company's move more as a way to increase usage of data services and help the company regain some of the dominance it once had in the data market.

"We're really setting the stage for differentiating the company around our greatest strength going forward," he said.

He also warned that the unlimited plan was only one piece of the puzzle to reviving the company.

"Will this offer be enough to move the needle around the kinds of large subscriber numbers that we were talking about earlier? The answer is no (but) it begins to make a difference, it begins to establish who we are," he said.

Mr. Hesse, who replaced ousted CEO Gary Forsee, already announced last month that the company would lay off about 4,000 employees, or 6.7 percent of its work force, and close 125 retail locations.

Earlier this month, he moved the company's corporate headquarters from Reston, Va., back to Kansas, which he said should improve efficiency and management oversight.

The company's shares have fallen more than 51 percent in value in the past year.

For the year, the company said it lost $29.6 billion, or $10.31 per share, compared with a profit of $1.3 billion, or 45 cents per share, in 2006.