Sprint reported another strong increase in EBITDA for its fiscal second quarter to September and raised its annual forecast again, driven by cost reductions and higher hardware revenues. The company said it returned to underlying growth in wireless service revenue for the first time in nearly five years, excluding the impact of the new revenue-recognition accounting standards. However, its customer base was down by 20,000 compared to June, as losses at wholesale and reseller customers offset a net increase of 95,000 in retail subscribers.
Quarterly revenues rose 6.4 percent year-on-year to USD 8.433 billion, led by a 43 percent increase in equipment sales. Service revenues were still down 3.4 percent to USD 5.762 billion, but Sprint said service revenues were up if the USD 173 million impact of the accounting standards is excluded.
Adjusted EBITDA jumped 20.8 percent year-on-year to USD 3.256 billion, despite costs of USD 58 million from hurricanes, USD 25 million for staff cuts and USD 56 million for its pending merger with T-Mobile. Sprint now expects annual adjusted EBITDA of USD 12.4-12.7 billion, compared to a forecast in July of USD 12.0-12.5 billion. The net result in Q2 improved to a profit of USD 196 million from a loss of USD 48 million a year ago, Sprint's fourth consecutive quarter of net profit.
Customer numbers were weaker compared to the previous quarter and a year earlier, with only 109,000 postpaid net additions in the three months and net loss of 34,000 postpaid phone customers. Sprint also shed 14,000 prepaid customers and 115,000 lines at wholesale and reseller customers. While total customer numbers are still up by half a million year-on-year, the base dropped by 20,000 from June to 54.547 million.
Postpaid churn increased to 1.78 percent and 1.73 percent for phone customers. ARPU was USD 43.99 for postpaid customers, down from USD 46.00 a year ago but up slightly from USD 43.55 in Q1.
Sprint said it expects to spend USD 5.0-5.5 billion on cash capex this year, the low end of its previously indicated range. in the first half of the year, capex totaled USD 2.4 billion, up from USD 1.8 billion a year earlier. Adjusted free cash flow over the same period fell to USD 533 million from USD 788 million.
