Sprint Nextel today reported a net loss of $847 million for the second quarter of 2011, while both postpaid and prepaid churn were at record lows.

Sprint said its postpaid churn of 1.75 percent was it lowest on record, while prepaid churn was the best in six years at 4.14 percent.

Sprint lost about 101,000 net postpaid subscribers during the quarter, a net improvement of 127,000, or 56 percent, compared to the second quarter of 2010.

Net subscribers were up 1.1 million, 674,000 of which were prepaid subscribers. Net wholesale and affiliate subscriber additions hit 519,000, while net postpaid subscriber additions stalled at just 275,000.

While a $847 million loss for the quarter was more than the year-ago quarter, when the company reported a net loss of $704 million, Sprint ironically saw higher ARPU from its postpaid subscribers. Wireless postpaid ARPU increased year-over-year from $55 to $57, the largest year-over-year postpaid ARPU growth in over seven years. The carrier attributed the boost to higher monthly recurring revenues as a result of premium data add-on charges for smartphones and the greater popularity of fixed-rate bundle plans, partially offset by lower overage, casual data and text revenues.

Prepaid ARPU of $28 for the quarter declined slightly year-over-year and sequentially as a result of a greater mix of Assurance Wireless customers who on average have lower ARPU than the remainder of the prepaid subscriber base.

CFO Joe Euteneuer said in an earnings call that the company had made a conscious decision to cut losses during an exceptionally competitive quarter that saw both Verizon and AT&T offering the popular iPhone, as well as Verizon Wireless’ rollout of LTE in a number of new markets.

“This was a unique quarter because of the intense competition,” Euteneuer said. “We made some conscious decisions in controlling the levers to make sure we didn’t get killed in the market.”

Sprint reconfirmed its forecast for 2011, saying it expects to improve total net wireless subscriber additions in 2011, as compared to 2010.

As of June 30, 2011, the company’s total liquidity was $5.2 billion, which consists of $4.3 billion in cash, cash equivalents and short-term investments and $900 million of borrowing capacity available under its revolving bank credit facility. The company’s next scheduled debt maturities of $2.3 billion are due in March 2012.

Shares of Sprint Nextel were down almost 16 percent in early morning trading to $4.32.