Sprint misses by $0.02, beats on revs; sees FY17 profit at the high end of prior range; lowers cap-ex
- Reports Q3 (Dec) loss of $0.12 per share, $0.02 worse than the Capital IQ Consensus of ($0.10); revenues rose 5.5% year/year to $8.55 bln vs the $8.31 bln Capital IQ Consensus.
- Adjusted EBITDA of $2.5 billion in the quarter compared to $1.9 billion in the year-ago period, an increase of 29%.
- As part of its ongoing cost reduction program, the co modified the terms of its vendor agreements associated with the service and repair program on Jan. 1, 2017, which are expected to be accretive to Adjusted EBITDA by ~$25 million to $50 million per quarter. Under the terms of the new agreements, the co will now only record the net margin and therefore expects the reduction to wireless service revenues of ~$200 million per quarter to be more than offset by a greater reduction in cost of service expenses.
- The co remains on track to achieve its goal of a sustainable reduction of $2 billion or more of run-rate operating expenses exiting fiscal year 2016 and has plans for further reductions in fiscal year 2017 and beyond. Sprint's focus on delivering the best value proposition in wireless resulted in 368,000 postpaid phone net additions in the quarter, its ninth consecutive quarter of year-over-year improvement.
- Even in a highly competitive quarter with multiple promotional offers from its competitors, Sprint was able to add more postpaid phone customers than both Verizon and AT&T and report its highest postpaid phone net additions in four years. The company also remained postpaid net port positive for the third quarter in a row and had its highest postpaid phone gross additions in four years. The company also reported the following results: Total net additions were 577,000 in the quarter, including postpaid net additions of 405,000, prepaid net losses of 501,000, and wholesale and affiliate net additions of 673,000. Total postpaid churn was 1.67 percent and postpaid phone churn was 1.57 percent in the quarter.
- The co now expects Adjusted EBITDA of $9.7 billion to $10 billion, at the high end of its previous expectation of $9.5 billion to $10 billion. The company now expects operating income of $1.4 billion to $1.7 billion, at the high end of its previous expectation of $1.2 billion to $1.7 billion. The co now expects cash capital expenditures, excluding devices leased through indirect channels, of $2 billion to $2.3 billion. The co's previous expectation was less than $3 billion. The company continues to expect Adjusted free cash flow around break-even.