July 25, 2016
OVERLAND PARK, Kan. (BUSINESS WIRE), July 25, 2016 - Sprint Corporation (NYSE:S)today reported operating results for the first quarter of fiscal year 2016, including the lowest postpaid phone churn in company history at 1.39 percent and a total liquidity position of nearly $11 billion. The company also reported total net operating revenues of $8 billion, net loss of $302 million, operating income of $361 million, and Adjusted EBITDA* of $2.5 billion.
“We had another quarter of solid progress in our turnaround with the highest first quarter postpaid phone net additions in nine years1, the lowest postpaid phone churn in company history, and finally being postpaid net port positive against all three national carriers after five years” said Sprint CEO Marcelo Claure. “We also grew wireless net operating revenue year-over-year while aggressively reducing the cash operating expenses of the business and our network is performing better than ever.”
Highest Fiscal First Quarter Postpaid Phone Net Additions in Nine Years1
Sprint’s focus on delivering the best value proposition in wireless resulted in the highest fiscal first quarter postpaid phone net additions in nine years and the fourth consecutive quarter of positive net additions with 173,000 in the quarter compared to net losses of 12,000 in the prior year quarter. The 185,000 year-over-year improvement was driven by both better acquisition and retention, as postpaid phone gross additions were up 10 percent year-over-year and postpaid phone churn of 1.39 percent improved 10 basis points to reach the lowest level in company history. Postpaid phone churn has improved year-over-year for six consecutive quarters.
The company recently launched an advertising campaign featuring Paul Marcarelli, the actor who used to ask if you “could hear me now” for Verizon, to highlight the fact that networks today aren’t that different so why should customers pay more. The campaign has been one of the most successful in company history. The ad has been viewed over 8 million times on YouTube and the company became postpaid net port positive against all three national carriers for the first time in over five years. Can you hear that?
The company also reported the following Sprint platform results:
Top Line Stabilizes as Cost Reductions Continue
With trends improving in its postpaid phone business, Sprint reported total net operating revenues that were flat to the prior year quarter for the first time in over two years. In addition, wireless net operating revenues grew 1 percent year-over-year and postpaid wireless service revenues have remained at $4.8 billion for the last three quarters.
Sprint also made considerable progress in its ongoing effort to transform the cost structure of the business, as the company realized over $550 million year-over-year reduction in cost of services and selling, general and administrative (SG&A) expenses. The company remains on track to achieve its goal of a sustainable reduction of $2 billion or more of run rate operating expenses exiting fiscal year 2016.
The company also reported the following financial results:
Liquidity Position Grows to Nearly $11 Billion
Sprint took several actions during the quarter to improve its financial flexibility, including successfully raising $2.2 billion of network-related financing, $1.1 billion from a second transaction with MLS, and $2.5 billion under a new unsecured financing facility, which was increased from its original $2 billion amount within the quarter. These transactions helped increase the company’s liquidity position to nearly $11 billion at the end of the quarter, including $5.1 billion of cash, cash equivalents and short-term investments. Additionally, the company has $1.1 billion of availability under vendor financing agreements that can be used toward the purchase of 2.5GHz network equipment.
The company continues to pursue additional financing initiatives, including additional handset and receivables financing transactions and a securitization involving a small portion of its spectrum assets.
LTE Plus Network Expansion Contributes to Speed and Reliability Performance
Sprint aims to unlock the value of the U.S.’s largest spectrum holding by densifying and optimizing its network to provide customers the best experience. The Sprint LTE Plus Network, which combines a rich tri-band spectrum portfolio with the LTE Advanced features of carrier aggregation and antenna beamforming, launched in 33 additional markets, increasing the total to 237 markets across the country.
Sprint’s LTE Plus Network expansion and its densification and optimization strategy have driven significant improvements in both data speeds and network reliability as noted by several third party sources.
Sprint’s deployment of 2.5GHz spectrum has become an integral part of how the company meets the growing data usage and speed demands of its customers, as that spectrum band now carries the highest percentage of Sprint’s LTE data traffic.
Fiscal Year 2016 Outlook
The company continues to expect:
Conference Call and Webcast
1 Excludes Nextel migrations
2 Average LTE download speeds based on Sprint analysis of Nielsen Mobile Performance (NMP) data for downloads (150KB+) – NMP 44 Market View (over 155 million POPs).
3 Based on Sprint’s analysis of latest Nielsen drive test data for average network reliability (voice & data) in top 106 markets.
4 Rankings based on RootMetrics 125 Metro RootScore Reports (January-June 2016) for mobile performance as tested on best available plans and devices on 4 mobile networks across all available network types. Your experience may vary. The RootMetrics awards are not an endorsement of Sprint. Visit www.rootmetrics.com.