US mobile operator Sprint reported a strong finish to its fiscal year to March, exceeding its annual guidance and reporting its first operating profit in nine years. The company reported an operating profit for the year of USD 310 million, better than its forecast of USD 100-300 million and reversing a loss of USD 1.9 billion in the previous tear. Adjusted EBITDA rose 36 percent to USD 8.1 billion, also beating its outlook, and the net loss narrowed to USD 2 billion from USD 3.3 billion a year ago. Adjusted free cash flow was a negative USD 1.4 billion compared to negative USD 3.3 billion in the prior year, but moved to a positive USD 603 million in the final quarter. Net operating revenues were still down 7 percent to USD 32.2 billion for the year, which the company blamed on lower equipment revenues after a shift in sourcing at the handset distribution subsidiary Brightstar to indirect channels.
In the fourth quarter, revenues fell 3 percent year-over-year, as growth in equipment revenue thanks to the shift to a leasing model was offset by lower wireless and wireline service revenue. Sprint added a net 447,000 new customers in the quarter, including 56,000 postpaid subscribers and 655,000 wholesale users. Over the full year it gained nearly 2.7 million customers, including over 1.2 million in postpaid. Postpaid churn of 1.72 percent in the quarter improved by 12 basis points year-over-year and was the lowest ever for a fiscal fourth quarter.
Sprint expects the improvement in results to continue in 2016 and maintained its outlook for USD 9.5-10 billion in adjusted EBITDA for the year to March 2017. Operating profit is estimated at 1.0-1.5 billion, and adjusted free cash flow should reach breakeven. Capital expenditure is expected to fall to USD 3 billion this year, with more network densification spending pushed to the next year. Sprint said its deep spectrum position and its small cells roll-out are also expected to improve overall capital efficiency. At the end of March, its LTE network covered nearly 300 million people, of which 70 percent over its 2.5 GHz band spectrum.
The company also highlighted its strong liquidity position, following a number of sale-leaseback transactions on device lease assets. Total committed liquidity is at USD 11 billion, including cash and credit facilities, up from USD 6 billion in December. It also has USD 1.2 billion in available vendor financing available. This should provide enough room to execute its strategic transformation as well as pay the USD 3.3 billion in debt coming due in 2016, Sprint said.
