Sprint has reported its latest financial numbers for the first quarter of fiscal year 2016. While the wireless carrier stated it had the highest post-paid subscriber additions for the quarter in nine years, it still had a net loss of $302 million, which was bigger than the $20 million it lost from the same period a year ago. The company recorded operating revenues of $8 billion during the quarter.
Sprint stated that its first quarter post-paid subscriber additions of 173,000 represented the fourth consecutive quarter it had seen positive net additions. It also saw a postpaid phone churn of 1.39%, which it said was the best in the company history. Sprint had a total of 377,000 net additions to its service during the quarter.
Sprint Reports Highest First Quarter Postpaid Phone Net Additions in Nine Years, Lowest Ever Postpaid Phone Churn, and Postpaid Net Port Positive Against All Three National Carriers with First Quarter of Fiscal Year 2016 Results
Postpaid phone net additions of 173,000 are the fourth consecutive quarter of positive net additions
Postpaid phone churn of 1.39 percent is the best in company history and improved year-over-year for the sixth consecutive quarter
Postpaid net port positive against all three national carriers for the first time in over five years
Net loss of $302 million, Operating income of $361 million and Adjusted EBITDA* of $2.5 billion
Over $550 million of year-over-year reduction in cost of service and selling, general, and administrative expenses
Net cash provided by operating activities of $542 million improved by more than $400 million year-over-year; Adjusted free cash flow* of $466 million grew by $2.7 billion year-over-year
Delivering financial flexibility with nearly $11 billion of liquidity, including $5.1 billion of cash, cash equivalents and short-term investments
Successfully raised $5.8 billion of liquidity in the quarter, including $2.2 billion of network-related financing, $1.1 billion from the second transaction with Mobile Leasing Solutions, LLC (MLS), and $2.5 billion under a new unsecured financing facility
LTE Plus Network now available in 237 markets
2.5GHz spectrum now carries more of Sprint's LTE traffic than any other spectrum band
OVERLAND PARK, Kan. (BUSINESS WIRE), July 25, 2016 - Sprint Corporation (NYSE:S) today reported operating results for the first quarter of fiscal year 2016, including the lowest postpaid phone churn in company history at 1.39 percent and a total liquidity position of nearly $11 billion. The company also reported total net operating revenues of $8 billion, net loss of $302 million, operating income of $361 million, and Adjusted EBITDA* of $2.5 billion.
"We had another quarter of solid progress in our turnaround with the highest first quarter postpaid phone net additions in nine years1, the lowest postpaid phone churn in company history, and finally being postpaid net port positive against all three national carriers after five years" said Sprint CEO Marcelo Claure. "We also grew wireless net operating revenue year-over-year while aggressively reducing the cash operating expenses of the business and our network is performing better than ever."
Highest Fiscal First Quarter Postpaid Phone Net Additions in Nine Years1
Sprint's focus on delivering the best value proposition in wireless resulted in the highest fiscal first quarter postpaid phone net additions in nine years and the fourth consecutive quarter of positive net additions with 173,000 in the quarter compared to net losses of 12,000 in the prior year quarter. The 185,000 year-over-year improvement was driven by both better acquisition and retention, as postpaid phone gross additions were up 10 percent year-over-year and postpaid phone churn of 1.39 percent improved 10 basis points to reach the lowest level in company history. Postpaid phone churn has improved year-over-year for six consecutive quarters.
The company recently launched an advertising campaign featuring Paul Marcarelli, the actor who used to ask if you "could hear me now" for Verizon, to highlight the fact that networks today aren't that different so why should customers pay more. The campaign has been one of the most successful in company history. The ad has been viewed over 8 million times on YouTube and the company became postpaid net port positive against all three national carriers for the first time in over five years. Can you hear that?
The company also reported the following Sprint platform results:
Total net additions were 377,000 in the quarter, including postpaid net additions of 180,000, prepaid net losses of 331,000, and wholesale and affiliate net additions of 528,000. Total postpaid churn of 1.56 percent in the quarter was flat year-over-year. Top Line Stabilizes as Cost Reductions Continue
With trends improving in its postpaid phone business, Sprint reported total net operating revenues that were flat to the prior year quarter for the first time in over two years. In addition, wireless net operating revenues grew 1 percent year-over-year and postpaid wireless service revenues have remained at $4.8 billion for the last three quarters.
Sprint also made considerable progress in its ongoing effort to transform the cost structure of the business, as the company realized over $550 million year-over-year reduction in cost of services and selling, general and administrative (SG&A) expenses. The company remains on track to achieve its goal of a sustainable reduction of $2 billion or more of run rate operating expenses exiting fiscal year 2016.
The company also reported the following financial results:
Net loss of $302 million, or $0.08 per share, in the quarter compared to a net loss of $20 million, or $0.01 per share in the year-ago period. The current quarter included $113 million of non-recurring contract termination charges primarily related to the termination of the pre-existing wholesale arrangement with Ntelos Holding Corp. Operating income of $361 million in the quarter compared to operating income of $501 million in the year-ago quarter. Adjusting for the aforementioned contract termination charges related to the pre-existing wholesale arrangement with Ntelos Holding Corp. in the current quarter, operating income would have been relatively flat year-over-year. Adjusted EBITDA* of $2.5 billion in the quarter grew 18 percent from the prior year period, primarily because of expense reductions, including over $550 million in cost of services and SG&A expenses. Net cash provided by operating activities was $542 million in the quarter compared to $128 million in the prior year. The $414 million year-over-year improvement was driven by expense reductions and favorable changes to working capital. Adjusted free cash flow* was positive $466 million in the quarter compared to negative $2.2 billion in the prior year. The $2.7 billion year-over-year improvement was due to expense reductions, lower capital spending, and net proceeds from our second transaction with MLS. Liquidity Position Grows to Nearly $11 Billion
Sprint took several actions during the quarter to improve its financial flexibility, including successfully raising $2.2 billion of network-related financing, $1.1 billion from a second transaction with MLS, and $2.5 billion under a new unsecured financing facility, which was increased from its original $2 billion amount within the quarter. These transactions helped increase the company's liquidity position to nearly $11 billion at the end of the quarter, including $5.1 billion of cash, cash equivalents and short-term investments. Additionally, the company has $1.1 billion of availability under vendor financing agreements that can be used toward the purchase of 2.5GHz network equipment.
The company continues to pursue additional financing initiatives, including additional handset and receivables financing transactions and a securitization involving a small portion of its spectrum assets.
LTE Plus Network Expansion Contributes to Speed and Reliability Performance
Sprint aims to unlock the value of the U.S.'s largest spectrum holding by densifying and optimizing its network to provide customers the best experience. The Sprint LTE Plus Network, which combines a rich tri-band spectrum portfolio with the LTE Advanced features of carrier aggregation and antenna beamforming, launched in 33 additional markets, increasing the total to 237 markets across the country.
Sprint's LTE Plus Network expansion and its densification and optimization strategy have driven significant improvements in both data speeds and network reliability as noted by several third party sources.
Sprint's LTE Plus Network continued to outperform Verizon, AT&T, and T-Mobile by delivering the fastest LTE download speeds based on recent crowd-sourced data from Nielsen.2 Additionally, Sprint's reliability beat T-Mobile and performed within 1 percent of AT&T and Verizon.3 Independent mobile analytics firm RootMetrics® awarded Sprint 75 percent more first place Network Reliability RootScore® Awards (from 24 to 42) in the 125 markets measured in the first half of 2016 compared to the prior testing period, including wins in Chicago, Houston, and Atlanta.4 Sprint's reliability beat Verizon and its average download speeds beat AT&T and T-Mobile, according to PC Magazine's Fastest Mobile Networks 2016 report. Sprint's deployment of 2.5GHz spectrum has become an integral part of how the company meets the growing data usage and speed demands of its customers, as that spectrum band now carries the highest percentage of Sprint's LTE data traffic.
Fiscal Year 2016 Outlook
The company continues to expect:
Operating income of $1 billion to $1.5 billion Adjusted EBITDA* of $9.5 billion to $10 billion Cash capital expenditures, excluding devices leased through indirect channels, of approximately $3 billion Adjusted free cash flow* around break-even