Sprint posted its first net profit in three years in its fiscal first quarter to June, and EBITDA rose to its highest level in nearly 10 years. Revenues were also up slightly year-on-year, but customer growth continues to lag its rivals in the US mobile market.
Net operating revenues rose 1.8 percent to USD 8.157 billion, as higher equipment sales helped offset lower service revenues, and adjusted EBITDA increased 16.1 percent to USD 2.853 billion. Sprint said it reduced the cost of services and SG&A expenses by nearly USD 370 million in the quarter and expects another USD 1.3-1.5 billion in net savings over the full fiscal year. The cost savings led to a small increase in the low end of Sprint's forecast EBITDA range for the year, to USD 10.8-11.2 billion from USD 10.7-11.2 billion previously.
The net result was a profit of USD 206 million compared to a loss of USD 302 million a year ago, due in part to the reversal of some legal provisions. Excluding one-time items, Sprint said it had a profit of USD 150 million.
Sprint increased cash capital expenditures to USD 1.6 billion in the quarter compared to USD 878 million a year ago. This led to a drop in adjusted free cash flow to USD 239 million from USD 466 million. Over the full year the company still expects cash capex of USD 3.5-4.0 billion.
In terms of customer growth, Sprint lost postpaid customers for a second consecutive quarter. Total net additions were 61,000 in the quarter, including postpaid net losses of 39,000, prepaid net additions of 35,000, and wholesale and affiliate net additions of 65,000. The total customer base numbered 53.7 million at the end of June, up from 53.4 million a year earlier.
Sprint blamed the postpaid losses mainly on the tablet segment. Postpaid phone net additions reached 88,000, less than the same period in 2016 as churn increased to 1.50 percent from 1.39 percent. Postpaid average billings per account totaled USD 168.95 for the quarter, down 1 percent from a year ago but 2 percent higher sequentially.
In a conference call on the results, the company also responded to recent rumours of a merger with T-Mobile or Charter Communications, the Wall Street Journal reported. "We’ve had sufficient conversations with several parties and soon we’re going to start making decisions," Sprint CEO Marcelo Claure. He suggested a merger with another mobile operator would be more difficult to get by regulators, while the WSJ's sources said Sprint's parent Softbank is preparing to make a takeover bid for Charter.
