Post Earnings Coverage as Sprint Shares Soar Over 27 Percent on Impressive Results

LONDON, UK / ACCESSWIRE / July 26, 2016 / Active Wall St. announces its post-earnings coverage on Sprint Corp. (NYSE: S). The company reported first-quarter fiscal 2016 earnings before markets opened on July 25, 2016. The wireless communications company’s stock soared over 27% after posting its sixth consecutive quarter of subscriber gains and the highest first quarter post-paid phone net additions in nine years. Register with us now for your free membership at: http://www.activewallst.com/register/.

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Earnings reviewed

For the quarter ended on June 30, 2016, Sprint reported net loss of $302 million, or $0.8 per share, as compared with a net loss of $20 million, or $0.1 per share, in the year ago period. The results included a onetime charge of $113 million on termination of contract with Ntelos Holding Corp. Q1 FY16 earnings before interest and taxes, excluding some items, were $2.46 billion, beating analysts’ estimates of $2.34 billion. For Q1 FY16, the company reported revenues of $8.01 billion compared to revenues of $8.84 billion in Q1 FY15. The per share loss was in line with analysts’ estimates, however, revenue came ahead of analysts’ expectations of $7.99 billion.

Sprint adds subscribers

During Q1 FY16, United States’ fourth-largest wireless carrier added 173,000 net post-paid subscribers, a fourth-straight quarter of subscriber additions, up from a net loss of 12,000 subscribers in Q1 FY15. By comparison, AT&T Inc. reported, on July 21, 2016, that it lost 180,000 wireless connections in the same period. Net additions for the company totaled 377,000 in Q1 FY16.

Total post-paid churn, a measure of service cancellations, remained flat on y-o-y basis at 1.56%. The average revenue per user (ARPU) for post-paid subscribers on Sprint platform declined to $51.54 from $55.48 in Q1 FY15, however, it still topped the $50.85 ARPU that analysts’ predicted.

CEO Marcelo Claure said, “We had another quarter of solid progress in our turnaround with the highest first quarter post-paid phone net additions in nine years, the lowest post-paid phone churn in company history, and finally being post-paid net port positive against all three national carriers after five years.”

Turnaround Showing Results

Sprint’s efforts to gain customers through the industry’s most aggressive promotions, including half-price deals, amid a competitive battle among wireless carriers may be showing results. As part of its turnaround, Sprint, controlled by SoftBank Group Corp., has pledged deep cost-cutting measures. The company has reduced network spending by 30% and has raised funds by mortgaging its own network gear and spectrum licenses. The Kansas-based company said that it reduced overhead costs by $550 million in Q1 FY16 compared to the year ago period, and Sprint is in line to cut $2 billion in annual operating expenses by the end of FY 2016.

As a result of the spectacular performance, Mr. Claure stated that the telecom giant may soon restraint the aggressive discounting, “You will see us move pricing up because we’re committed to increasing the average billing per user.”

Guidance and Share Repurchase

Sprint management reaffirmed its guidance for FY 2016. The company is aiming for operating income in the range of $1 billion to $1.5 billion, a huge improvement from its $310 million in operating income in the trailing twelve month. The company is forecasting adjusted EBITDA in a range of $9.5 billion to $10 billion, and full-year capital spending to be $3 billion, excluding devices leased.

Stock Performance

Following its earnings release, Sprint’s shares soared 27.71% to close Monday, July 25, 2016, trading session at $5.90; its highest level since November 2014. The stock has jumped 62.98% since the beginning of the year.

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