Sprint Reports Inflection In Wireless Service Revenue With Fiscal Year 2018 First Quarter Results

Sprint Corporation today reported an inflection in wireless service revenue and the sixth consecutive quarter of retail phone net additions as part of results for the first quarter of fiscal year 2018.

“Sprint continued to deliver solid results this quarter while embarking on our transformative merger with T-Mobile,” said Sprint CEO Michel Combes, “By balancing growth and profitability, we were able to grow wireless service revenue sequentially, continue to add retail phone customers, generate net income for the third consecutive quarter, and improve the network.”

Wireless Service Revenue Returns to Sequential Growth
Sprint reported sequential growth in wireless service revenue for the first time in more than four years, when excluding the impact of the new revenue recognition standard, as postpaid and prepaid ARPU grew sequentially. The company continues to expect year-over-year growth in wireless service revenue to occur by the end of fiscal year 2018, excluding the impact of the new revenue recognition standard.

Several other revenue metrics showed improvement in the quarter, excluding the impact of the new revenue recognition standard.

• Postpaid ARPU grew sequentially for the first time in nearly five years.
• Postpaid service revenue grew sequentially for first time in more than four years.
• Prepaid service revenue grew both sequentially and year-over-year.

Continued Focus on Profitability
Sprint reported its third consecutive quarter of net income, its 10^th consecutive quarter of operating income, and its highest adjusted EBITDA* in more than 11 years, all excluding the positive impact of the new revenue recognition standard. The new revenue recognition standard had a positive impact of $152 million on reported net income and $192 million on reported operating income and adjusted EBITDA* in the quarter.

Operating income of $815 million would have been relatively flat year-over-year when adjusting for the new revenue recognition standard and $135 million of merger and other non-recurring costs this quarter and a net benefit of $364 million from non-recurring items in the year ago period. Similarly, net income of $176 million would also have been relatively flat year-over-year when adjusting for the aforementioned items on a tax-adjusted basis.

Sprint Continues to Add Retail Phone Customers and Launches New Unlimited Plans
Sprint’s focus on both its postpaid and prepaid businesses resulted in the sixth consecutive quarter of retail phone net additions.

• Postpaid phone net additions of 87,000 marked the 12^th consecutive quarter of net additions, including net additions in the business market for the seventh consecutive quarter.
• Prepaid net additions of 3,000 were the sixth consecutive quarter of net additions, as continued strength in Boost Mobile was partially offset by losses in other brands. Prepaid churn was the lowest in more than three years and Boost Mobile gross additions grew year-over-year for the fourth consecutive quarter.

Sprint recently introduced several new plans that offer more choice and features for an incredible value. The new Unlimited Plus, Unlimited Basic, Unlimited Military, and Unlimited 55+ plans are available to new and existing customers and are just the beginning of “Unlimited for All,” the company’s initiative to tailor plans so customers can get the best choice for them.

Driving Growth in Digital
Sprint also plans to offer the best digital customer experience, including leveraging artificial intelligence to improve customer care interactions, utilizing deep dive analytics to identify customer issues, and boosting the mix of sales in digital channels. Postpaid phone gross additions in digital channels grew more than 50 percent year-over-year in the quarter and the mix of gross additions in digital channels was also up year-over-year.

Network Built for Unlimited Keeps Getting Better
With more than 200 MHz of sub-6 GHz spectrum, Sprint has the Network Built for Unlimited and made continued progress on executing its Next-Gen Network plan in the quarter.

• Completed thousands of tri-band upgrades and now has 2.5 GHz spectrum deployed on nearly two-thirds of its macro sites.
• Added thousands of new outdoor small cells and currently has more than 15,000 deployed including both mini-macros and strand mounts.
• Distributed more than 65,000 Sprint Magic Boxes, bringing the total to more than 260,000 nationwide.

These deployments are contributing to Sprint providing customers with a better network experience. In fact, Sprint is the most improved network according to Ookla as shown in Speedtest Intelligence data¹, and PCMag’s 2018 Fastest Mobile Networks. In both, the company’s year-over-year increase in national average download speeds outpaced the competitors, including an 87 percent lift reported in PCMag’s annual tests.

Sprint’s deployment of Massive MIMO radios, a key technology for 5G, is underway and the company continues to expect to launch the first mobile 5G network in the U.S. in the first half of 2019.

Fiscal Year 2018 Outlook

• The company is increasing adjusted EBITDA* expectations on a reported basis to a range of $12.0 billion to $12.5 billion, as impacts of the new revenue recognition standard were higher than preliminary estimates. The previous expectation was $11.6 billion to $12.1 billion.
• Excluding the impact of the new revenue recognition standard, the company continues to expect adjusted EBITDA* to be $11.3 billion to $11.8 billion.
• The company continues to expect cash capital expenditures excluding leased devices to be $5 billion to $6 billion. – CT Bureau