Sprint reported a further improvement in underlying results in its fiscal first quarter to June, adding 173,000 new postpaid phone customers in the three months. After record low churn of 1.36 percent, the postpaid phone base totaled 25.322 million at the end of the period, up 1.8 percent from a year earlier. While it continued to lose prepaid users, growth in the wholesale and connected devices markets helped the total number of connections grow to 59.453 million from 58.806 million at the end of March.
An around 50 percent increase in equipment revenue helped offset a slide in service revenues, leaving total revenues nearly stable year-on-year at USD 8.01 billion. Adjusted EBITDA jumped 18 percent to USD 2.5 billion, driven USD 550 million in cuts to operating expenses. Operating profit fell to USD 361 million from USD 501 million a year ago, and the net loss widened to USD 302 million from USD 20 million, due mainly to USD 113 million of one-time contract termination charges following the takeover of former wholesale customer Ntelos by Sprint's affiliate Shentel.
After reducing capital expenditure and raising more from the securitisation of its handset leasing revenues, Sprint improved adjusted free cash flow to a positive USD 466 million in the quarter compared to negative USD 2.2 billion in the prior year. The company said it had nearly USD 11 billion in liquidity at the end of the period, including USD 5.1 billion in cash. It plans to continue the securitisation transactions and also scaled up its credit facility during the quarter.
For the full year, adjusted free cash flow is expected to around breakeven, after cash capital expenditure of USD 3 billion. Operating profit is estimated at USD 1.0-1.5 billion in 2016, and Sprint maintained its target for adjusted EBITDA of USD 9.5-10.0 billion this year.
