KANSAS CITY, Mo. — Despite a widening net loss, Sprint Nextel finally got some good news in its long recovery Monday, as a big surge in "prepaid" customers offset another nightmarish drop in valuable subscribers who sign annual contracts.

Investors responded by sending shares of the nation's third-largest wireless provider up sharply. Sprint shares gained 33 cents, or 7.1 percent, to close at $5 after reaching as high as $5.48 earlier in the session.

The Overland Park, Kan.-based company lost $594 million, or 21 cents per share, during the three months ending March 31, versus a loss of $505 million, or 18 cents per share, a year ago.

Not including one-time charges, Sprint said it would have earned 3 cents per share, compared with the 4-cent loss analysts surveyed by Thomson Reuters had predicted.

The company said it recorded a $327 million charge for severance and other costs connected with its announcement in January that it planned to cut 8,000 more jobs — 14 percent of its work force. Sprint cut 4,000 jobs last year.

Revenue declined 12 percent to $8.21 billion, below analysts' expectation of $8.28 billion.

The Wall Street Journal, citing unnamed sources, reported Monday that Sprint was in final discussions to outsource management of its cellular network — and transfer between 5,000 and 7,000 U.S. jobs — to Telefon AB L.M. Ericsson. Stifel Nicolaus analyst Christopher King said shifting the network management to another company could cut Sprint's annual expenses by $1 billion.