Sprint Cost Cuts Help Adjusted Profit Exceed Analysts’ Estimates

  • Carrier adds 56,000 customers; analysts estimated 197,000
  • Cash increases by 18% from prior quarter to $2.6 billion

Sprint Corp., the fourth-largest U.S. wireless carrier, posted adjusted earnings that beat analysts’ projections as cost cuts helped make up for a lower amount of subscriber additions than estimated.

Adjusted earnings before interest, depreciation and amortization for the fiscal fourth quarter, which ended March 31, was $2.16 billion, compared with a $2.02 billion average of estimates compiled by Bloomberg. The company cut $1.3 billion in expenses in the fiscal year.

Shares rose 3.2 percent to $3.60 in early trading Tuesday. The stock had fallen 3.6 percent through Monday.

Sprint, which has booked more than seven years of losses, has been the most aggressive price cutter among the four nationwide carriers, offering promotions such as $1 iPhones and charging customers half the cost of their bills with other carriers. The promotions highlight a go-for-broke strategy by Chief Executive Officer Marcelo Claure, who is trying to cut $2.5 billion in costs, improve the network and add customers in a maturing wireless market.

Sprint added 56,000 monthly subscribers, compared with the 197,000 average of six analysts surveyed by Bloomberg. Cash and equivalents increased by 18 percent from the previous quarter to $2.6 billion. 

To raise cash, Sprint has been converting its phone inventory into a financing mechanism through a sale-and-lease arrangement led by SoftBank Group Corp., which controls about 83 percent of Sprint. The carrier is also using its network infrastructure as collateral for financing -- an alternative to higher rates in the high-yield bond market. Last week the carrier received $2 billion in bridge financing from Mizuho Bank Ltd.

  • Sales were $8.1 billion, compared with analysts’ estimate of $8 billion.
  • A net loss of 14 cents a share compared with the 13-cent average of estimates compiled by Bloomberg.
  • Average revenue per user was $51.68, compared with $51.48 analysts predicted.
  • Adjusted Ebitda for fiscal 2016 will be $9.5 billion to $10 billion, Overland Park, Kansas-based Sprint said in a statement Tuesday.
  • Operating income for 2016 will be $1 billion to $1.5 billion.
  • Excluding phone-leasing costs, Sprint forecast about $3 billion in full-year capital spending.
  • Adjusted free cash flow will be about “break-even,” the company said in a statement.
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