Sprint Beats Expectations For Second Quarter
For the second quarter, ended June 30, Sprint Corp. (NYSE:S) posted a loss of $302 million, or 8 cents a share. Last year in the same quarter, the company lost $20 million, or a penny a share. Sprint’s revenue slid less than expected in the quarter. The company reported revenue of $8.01 billion for the quarter. Analysts forecast a loss of 8 cents a share on $7.98 billion in revenue, according to a poll by Thomson Reuters.
Sprint continued to add customers in the latest quarter. Sprint added 377,000 subscribers, including 173,000 postpaid net subscribers, its most-profitable type of customer. It was the fourth consecutive quarter of positive subscriber additions after several years of losses. It was also the company’s highest postpaid phone net additions for the period in nine years and the lowest postpaid phone churn in its history. The company’s prepaid business lost 331,000 customers in the period.
According to Chief Executive Marcelo Claure, more Verizon customers switched to Sprint than Sprint customers left for Verizon. The trend also held true for AT&T and T-Mobile. Mr. Claure commented on “finally being postpaid net port positive against all three national carriers after five years.” Sprint’s postpaid churn rate for the latest quarter was flat from a year ago. The company reported a loss of 12,000 customers a year ago.
The company reported reducing overhead costs by $550 million year-over-year during the quarter. In October, Sprint announced plans to cut as much as $2.5 billion in costs in the following six months. It reported that it is on track for additional reductions of $2 billion or more of run rate operating expenses at the end of the fiscal year.
Aggressive discounting helped the company attract new subscribers. The company has been offering its service for half the price of its rivals. The promotion has been a hit with consumers. However, the discounts won’t last forever.
The current half-off promotion may end by mid-September, which is when the new iPhones are typically released. Mr. Claure said on the call that “there will be a time in the not so distant future in which we’re going to go back to traditional rate plans.” Mr. Claure didn’t specifically say that there would be price increases and wouldn’t provide much detail on the company’s plan.
Even with the heavily discounted services, average billing per user grew quarter-over-quarter. Wireless net operating revenue also grew year-over-year. Sprint has made improvements to its network to counter a continued perception that it is weaker than its rivals. Sprint reiterated its 2016 guidance for adjusted earnings to be $9.5 billion to $10 billion, up from $8.1 billion in 2015.