Sprint reports Q3 (Dec) results, revs in-line; reaffirms FY17 EBITDA (5.10)
- Reports Q3 (Dec) earnings of $0.02 per share, ex-$7.1 bln tax benefit, may not be comparable to the Capital IQ Consensus of ($0.05); revenues fell 3.6% year/year to $8.24 bln vs the $8.19 bln Capital IQ Consensus.; adj. EBITDA +11% to $2.7 bln -- highest Q3 EBITDA in 11 years.
- Sprint's execution in both its postpaid and prepaid businesses resulted in the highest retail net additions in nearly three years. Postpaid net additions of 256,000 in the quarter included 184,000 phone net additions, the tenth consecutive quarter of postpaid phone net additions. Sprint's prepaid business also continued to add customers with 63,000 net additions, its fourth consecutive quarter of net additions and a 523,000 improvement compared to the prior year. Prepaid churn improved year-over-year for the sixth consecutive quarter and prepaid gross additions grew year-over-year for the second consecutive quarter. The sustained improvement in prepaid customer trends has translated into better financial results, as prepaid wireless service revenue grew year-over-year for the first time in nearly three years.
- Sprint continued to make progress on its multi-year plan to improve its cost structure. Excluding ~$100 million of hurricane-related and other non-recurring charges in the quarter, the company reported approximately $260 million of combined year-over-year reductions in cost of services and selling, general and administrative expenses, bringing the year-to-date total reduction to more than $1 billion. Adjusted free cash flow of $397 million improved by more than $1 billion year-over-year.
- The company is raising its expectation for operating income to $2.5 billion to $2.7 billion. Its previous expectation was $2.1 billion to $2.5 billion. The company expects adjusted EBITDA to be around the mid-point of its prior expectation of $10.8 billion to $11.2 billion. The company expects cash capital expenditures, excluding devices leased through indirect channels, to be at the low end of its prior expectation of $3.5 billion to $4 billion. The company is raising its expectation for adjusted free cash flow* to $500 million to $700 million. Its previous expectation was around break-even.