Sprint Corp. gained subscribers for the second quarter in a row and posted higher earnings than analysts anticipated, in a sign that Chief Executive Officer Marcelo Claure’s turnaround plan is starting to take hold.
Sprint posted a surprise gain of 170,000 new monthly subscribers in the fiscal fourth quarter ended in March, while five analysts surveyed by Bloomberg predicted a loss of 2,800, on average. Tablet sales helped disguise weak phone sales, a growing trend among carriers.
This is still the second consecutive gain in the more lucrative postpaid users for Claure, who has been focused on turning the carrier around since he joined in August. The gain brought the total number of users to 57.1 million, meaning Sprint held on to its No. 3 ranking ahead of challenger T-Mobile US Inc.
“Subscriber growth, even in a mature industry, continues to be an item of focus,” Walt Piecyk, an analyst at BTIG LLC, said in an interview before the results were released. “If Sprint can return to subscriber growth, it’d be an important catalyst if they want to be an effective competitor.”
Earnings before interest, taxes, depreciation and amortization were $1.7 billion, Overland Park, Kansas-based Sprint reported, topping the $1.66 billion average of estimates compiled by Bloomberg.
The carrier added 349,000 Sprint-branded tablet subscribers, more than offsetting the loss of 201,000 Sprint-branded phone subscribers. Analysts predicted a gain of 209,000 tablet subscribers and a loss of 123,000 phone customers, on average.
The shares rose 1.4 at $5.22 in early trading in New York. The stock was up 24 percent this year, as of Monday’s close, while T-Mobile jumped 27 percent.
Sales fell 6.7 percent to $8.28 billion, trailing the $8.46 billion predicted by analysts. The average monthly subscriber phone bill was $56.72, less than the $57.02 average estimate of five analysts.
Sprint, which is controlled by Tokyo-based SoftBank Corp., posted a 25.6 percent wireless margin, wider than 25.3 percent a year earlier.
Claure was hired by SoftBank President Masayoshi Son to revive subscriber growth and reverse seven years of customer defections. He’s cut more than 2,000 employees, expanded retail into 1,435 RadioShack Corp. stores, cut prices on service plans and concentrated network upgrades to a handful of cities for better coverage.
Last month, Google Inc. introduced Project Fi a combined Wi-Fi and cellular mobile that will use Sprint and T-Mobile’s network to compete with larger carriers.