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Sprint Delivers Best Financial Results In Company History With Highest Ever Net Income And Operating Income In Fiscal Year 2017

Sprint Press Release

May 2, 2018

  • Fiscal year 2017 postpaid phone net additions of 606,000
    • Third consecutive year of postpaid phone net additions
    • Highest postpaid phone gross additions in six years
    • Fiscal fourth quarter postpaid phone net additions of 55,000 marked the eleventh consecutive quarter of net additions
  • Fiscal year 2017 prepaid net additions of 363,000 compared to net losses of 1 million in the prior year
    • Prepaid net additions for the first time in three years
    • Prepaid churn of 4.58 percent was the lowest in three years
    • Fiscal fourth quarter prepaid net additions of 170,000
  • Fiscal year 2017 net income of $7.4 billion , operating income of $2.7 billion and Adjusted EBITDA* of $11.1 billion
    • Net income for the first time in 11 years, even when excluding $7.1 billion of one-time favorable impact from tax reform
    • Highest operating income in company history and highest Adjusted EBITDA* in 11 years
    • Fiscal fourth quarter net income of $69 million , operating income of $236 million , and Adjusted EBITDA* of $2.8 billion
  • Fiscal year 2017 net cash provided by operating activities of $10.1 billion and adjusted free cash flow* of $945 million
    • Second consecutive year of positive adjusted free cash flow*
  • Completed thousands of tri-band upgrades on macro sites, added thousands of outdoor small cells and deployed more than 200,000 Sprint Magic Boxes

Sprint Corporation (NYSE: S) today reported operating results for the fiscal 2017 fourth quarter and full year, including its highest annual retail phone net additions in five years and the best profitability in company history with its highest annual operating income at $2.7 billion and annual net income for the first time in 11 years, even when excluding the one-time favorable impact from tax reform. The company also reported its highest adjusted EBITDA* in 11 years at$11.1 billion and its second consecutive year of positive adjusted free cash flow* at $945 million .

“In the fourth year of our turnaround, Sprint delivered the best financial results in company history as a result of growing our customer base and continuously improving our cost structure, while significantly improving our LTE network and initiating deployment for the first truly mobile 5G network in the U.S,” saidSprint CEO Marcelo Claure . “By executing our turnaround, we have positioned Sprint for strategic opportunities which led to our proposed merger with T-Mobile , which will create an entirely new level of innovation and disruption in the industry.”

Sprint Adds Nearly 1 Million Retail Phone Customers in Fiscal Year 2017 
Sprint’s focus on both its postpaid and prepaid businesses resulted in nearly 1 million retail phone net additions in fiscal year 2017, an improvement of more than 1 million compared to the prior year.

  • Postpaid phone net additions of 606,000 marked the third consecutive year of net additions, as postpaid phone gross additions reached their highest level in six years. For the fourth quarter, postpaid phone net additions of 55,000 marked the eleventh consecutive quarter of net additions, including net additions in the business space for the sixth consecutive quarter. The current quarter and full year results included 44,000 net migrations from prepaid to non- Sprint branded postpaid.
  • Prepaid net additions of 363,000 compared to net losses of 1 million in the prior year, an improvement of nearly 1.4 million driven by a resurgence in the Boost brand. Prepaid churn of 4.58 percent, the lowest in three years, improved by 80 basis points year-over-year. For the fourth quarter, prepaid net additions were 170,000, including the highest share of gross additions in two years and year-over-year improvement in churn for the seventh consecutive quarter.

Cost Reduction Program Contributes to Improved Cash Flows 
Sprint continued to make progress on its multi-year plan to improve its cost structure. Excluding approximately $100 million of hurricane-related and other non-recurring charges in fiscal year 2017, the company reported approximately $1.1 billion of combined year-over-year reductions in cost of services and selling, general and administrative expenses, making it the fourth consecutive year of more than $1 billion of year-over-year reductions and bringing the total reduction over the last four years to approximately $6 billion . The year-over-year reductions were primarily driven by changes to the device insurance program, as well as lower network expenses.

Fiscal year 2017 net cash provided by operating activities of $10.1 billion improved by $13.4 billion year-over-year, primarily due to a modification of our accounts receivable facility in February 2017 . Adjusted free cash flow* of $945 million improved by $338 million year-over-year, mostly due to operational improvements in the business.

Net income of $7.4 billion in fiscal year 2017 included a one-time $7.1 billion non-cash benefit from tax reform, resulting from a re-measurement of our deferred tax assets and liabilities under provisions contained in the new tax law.

The company also reported the following financial results:

(Millions, except per share data)Fiscal 
4Q17
Fiscal 
4Q16
Change Fiscal 
2017
Fiscal 
2016
Change
Net income (loss)$69($283)$352 $7,389($1,206)$8,595
Basic income (loss) per share$0.02($0.07)$0.09 $1.85($0.30)$2.15
Operating income$236$470($234) $2,727$1,764$963
Adjusted EBITDA*$2,768$2,680$88 $11,069$9,934$1,135
Net cash provided by (used in) operating activities$2,653($523)$3,176 $10,062($3,290)$13,352
Adjusted free cash flow*($240)$80($320) $945$607$338

Network Quality Improves as Progress Toward First Mobile 5G Network Continues 
Sprint is building a super-reliable, high-capacity mobile network that will deliver a great LTE experience and enable industry-leading 5G capabilities. The company’s Next-Gen Network plan involves:

  • Upgrading existing towers to leverage all three of the company’s spectrum bands
  • Building new macro cell sites
  • Adding more small cells including mini-macros, strand mounts with cable operators and Sprint Magic Boxes
  • Deploying 5G technologies such as Massive MIMO

With more than 160 MHz of 2.5 GHz spectrum in the top 100 markets, Sprint is one of the only operators in the world with enough capacity to operate LTE and 5G simultaneously using Massive MIMO and huge channels of 100-200 MHz of licensed spectrum on the same radios. Sprint expects to launch the first mobile 5G network in the U.S. in the first half of 2019.

Sprint completed thousands of tri-band upgrades on macro sites, added thousands of outdoor small cells and deployed more than 200,000 Sprint Magic Boxes in fiscal year 2017. These deployments helped drive continued improvement in network quality, as seen in Ookla’s Speedtest Intelligence data.

  • Sprint saw a 36 percent year-over-year increase in its national average download speed, the largest increase of the top four national carriers. 1
  • Sprint is #1 for fastest average download speed in 100 cities, more than twice as many cities as last year and more than AT&T for the third consecutive quarter. 2

Fiscal Year 2018 Outlook

  • The company expects adjusted EBITDA* of $11.3 billion to $11.8 billion . Including the impact of the new revenue recognition accounting standard, adjusted EBITDA* is expected to increase to a range of $11.6 billion to $12.1 billion .
  • The company expects cash capital expenditures excluding leased devices to be $5 billion to $6 billion .

More…

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