OVERLAND PARK, Kan. (BUSINESS WIRE), May 03, 2017 - Sprint Corporation (NYSE: S) today reported operating results for the fiscal year 2016 fourth quarter and full year, including annual growth in net operating revenues for the first time in three years and more than twice as many postpaid phone net additions as last year. The company also reported its highest annual operating income in 10 years at $1.8 billion, Adjusted EBITDA* of nearly $10 billion for the year, which grew 22 percent year-over-year, and positive adjusted free cash flow*.
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For the fiscal fourth quarter, the company reported operating income of $470 million and Adjusted EBITDA* of $2.7 billion, both improvements of more than $450 million year-over-year.
“Sprint took a big step forward in the second year of our turnaround plan,” said Sprint CEO Marcelo Claure. “Net operating revenues returned to growth and cost reductions accelerated, leading to the highest operating income in a decade and a return to positive adjusted free cash flow*.”
Postpaid Phone Net Additions More Than Double Year-Over-Year and Prepaid Returns to Growth
Sprint’s focus on delivering the most attractive value proposition in wireless resulted in 930,000 postpaid phone net additions in fiscal year 2016, more than twice as many as the prior year. The company also reported its highest postpaid phone gross additions in four years and improved its share of gross additions for the second year in a row.
In a competitive quarter where Verizon and AT&T introduced new unlimited data plans, Sprint added 42,000 postpaid phone customers and recorded its tenth consecutive quarter of year-over-year improvement. Sprint continued to take share and has now added more postpaid phone customers than Verizon for five consecutive quarters and more than AT&T for 10 consecutive quarters.
The company also saw significant improvements in its prepaid business in the quarter, adding 180,000 customers and returning to customer growth for the first time in two years. With the resurgence of prepaid and the continued growth in postpaid phone customers, the company reported positive net additions for both in the same quarter for the first time in four years.
The company also reported the following results:
Another Year of Significant Cost Reductions
Sprint continued to make progress on its multi-year plan to transform the way it does business and significantly lower its cost structure. The company delivered $2.1 billion of year-over-year reductions in cost of service and selling, general and administrative expenses in fiscal year 2016, bringing the two-year total reduction to $3.4 billion.
The company also reported the following financial results:
Obtaining Lower Cost Funding to Retire Higher Cost Debt
Sprint continued to execute its financing strategy of diversifying its funding sources, lowering its cost of capital, and reducing its future cash interest expenses. During the quarter Sprint replaced its $3.3 billion unsecured revolving bank credit facility with a new $6 billion secured credit facility, consisting of a $4 billion seven-year term loan and a $2 billion four-year revolving bank credit facility. At closing, the company borrowed $4 billion on the term loan facility at a rate of LIBOR plus 250 basis points, which is about half of Sprint’s current effective interest rate.
The company also retired approximately $1.6 billion of debt maturities with higher interest payments in the quarter, including $1 billion of 9.125 percent senior notes, $300 million associated with its Network LeaseCo facility, and $250 million related to the early retirement of tranche 4 of its EDC facility.
Total liquidity was $10.9 billion at the end of the quarter, including $8.3 billion of cash, cash equivalents and short-term investments. Additionally, the company has $1.2 billion of availability under vendor financing agreements that can be used toward the purchase of 2.5GHz network equipment.
New Technology Expected to Continue Network Improvements
Sprint is unlocking the value of the largest spectrum holdings in the U.S. in a capital-efficient manner and third party sources continue to validate the company’s network performance improvements.
As previously announced, Sprint helped develop a breakthrough innovation called High Performance User Equipment (HPUE), a new technology that extends the coverage of its 2.5GHz spectrum by up to 30 percent to nearly match its mid-band 1.9GHz spectrum performance on capable devices. In one of the fastest progressions from global standard approval to commercial availability, HPUE-capable devices are already available to Sprint customers, including the recently launched LG G6, Samsung Galaxy S8, and ZTE Max XL.
The company will be announcing another exciting technology innovation on today’s conference call.
Fiscal Year 2017 Outlook
Conference Call and Webcast