Sprint posts positive sequential customer growth, improved financials in teasing quarterly results; tickles investors
The recently completed third quarter is shaping up to be dynamically interesting for the domestic wireless carrier space, made more so by the release of preliminary results from the nation’s No. 4 carrier, Sprint.
The operator, which due to an altered financial schedule counts the July through September time frame as its second fiscal quarter, said it added 740,000 net connections during the period. That growth included 344,000 postpaid net additions, 823,000 net connection additions through its wholesale and affiliates, and the loss of 427,000 prepaid connections.
Of its postpaid growth, Sprint said phone connections counted for 347,000 net additions, which was double the previous quarter and more than five-times what it posted for the same quarter last year.
Indeed, the carrier showed robust sequential growth compared to the 377,000 net connections posted in the previous quarter, which had a similar matrix of growth for direct postpaid, wholesale and affiliates, but a dip in direct prepaid net additions.
However, the year-over-year comparison was a bit incomplete as Sprint managed to post 1.05 million net connection additions last year, with greater overall growth in its direct postpaid, and wholesale and affiliate segments, and fewer prepaid losses.
Outside of outright growth, Sprint managed to further trim postpaid churn, which dipped from 1.54% last year to 1.52% this year. The carrier noted postpaid phone churn for the latest quarter hit a company record low of 1.37%.
While improved, Sprint’s numbers could fall short of rival T-Mobile US, which late last month said it had gained more than 750,000 branded postpaid net phone additions and 650,000 net prepaid customer additions just prior to the quarter ending. More directly, T-Mobile US said it had snared nearly 400,000 customers from AT&T Mobility, nearly 300,000 customers from Sprint and more than 250,000 customers from Verizon Wireless by mid-September.
T-Mobile US has dominated its nationwide rivals over the past several quarters in terms of net connection growth, with its biggest boost coming from lucrative postpaid subscribers. The carrier said it added nearly 1.9 million total net connections during Q2, compared with 1.4 million net connection additions posted by AT&T Mobility, 585,000 direct net connections posted by Verizon Wireless and 377,000 net adds reported by Sprint.
Further evidence of the market’s dynamic will be seen later this week as Verizon Communications is set to lead off full reporting of quarterly results. Sprint is scheduled to release full results on Oct. 25.
Sprint finances mixed
In terms of finances, Sprint’s focus on cost-cutting appears to be having an impact as it continues to trim overall losses.
The carrier reported $8.25 billion in total net operating revenue for the latest quarter compared with $8 billion posted last year and in the previous quarter. Net losses also improved from $585 million last year and $302 million from the previous quarter to $142 million for fiscal Q2.
Adjusted earnings before interest, taxes, depreciation and amortization was a mixed bag, with the $2.35 billion reported for the most recent quarter improving year-over-year, but down sequentially. Sprint did note free cash flow surged year-over-year from negative $100 million to a return of $707 million.
Quarterly spending on capital expenses also remained on a tight leash, with the carrier reporting $828 million in cash capex for the latest quarter, including $470 million on network – which was less than the $1.1 billion from last year – and $358 million for leased devices. Sprint reported just $376 million in capex in its fiscal Q1, with plans to hold full-year capex to around $3 billion.
Investors were lightly tickled by the news, with Sprint’s stock (S) trading up more than 1% early Tuesday. The carrier’s stock price did hit a new 52-week high of $7.16 per share, and moved closer to the $8 per share mark, which is said to trigger a significant bonus structure for Sprint CEO Marcelo Claure.
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