By Yingcong (June) Fu
Sprint Corp. narrowed its net loss by 43 percent in the most recent quarter as the company logged the largest number of new postpaid phone subscribers in four years.
The telecommunications company said Tuesday that its net loss in the fiscal quarter ended Dec. 31 narrowed to $479 million, or 12 cents per diluted share. from $836 million, or 21 cents per diluted share, in the year-ago period. The results beat the analysts’ consensus estimate of 8 cents, according to Bloomberg.
Sprint CEO Marcelo Claure declared the company is “turning the corner” and gaining ground against competitors Verizon and AT&T.
Sprint added 368,000 new postpaid phone subscribers in the third quarter, the most in four years, beating AT&T and Verizon.
“It signaled a continuation of Sprint taking away customers from T-Mobile and Verizon,” said Charlie Erlikh, analyst at Robert W. Baird in Milwaukee, Wis.
T-Mobile, with 851,000 postpaid subscribers in the latest quarter, leads the market.
“The reason why we’re not number one in net adds and we’re number two is the fact that we haven’t invested a lot in our distribution,” Claure said on the company’s conference call Tuesday.
Revenue increased 5.5 percent to $8.55 billion from $8.11 billion in a year-ago period.
Wireless revenue increased 6.5 percent to $8.17 billion, but such growth is largely due to a growing mix of sales in installment plans, Alex Zhao, analyst at Morningstar, Inc. in Chicago, wrote in a report published on Tuesday. Zhao rates Sprint a “sell” with a target price of $4, less than half the current price.
“We believe Sprint keeps moving in the right direction, but progress thus far is not enough for us to change our view,” he wrote, maintaining “a very high uncertainty rating”.
The company continued its cost-cutting program by trimming nearly $500 million in the quarter. This resulted from lower labor expenses, lower network and roaming expenses, and the shutdown of its WiMax network, according to Tarek Robbiati, Sprint’s chief financial officer, in a conference call with analysts.
Sprint said it’s on track to reach its goal of $2 billion in cost reductions for fiscal 2016 and said it has plans for further cuts in fiscal 2017.
At the same time, the company plans to open between 500 and 1,000 stores over the next 18 months, Claure said on the conference call.
Shares increased 12 cents, or 1.3 percent, to close at $9.23 on Tuesday. They hit a 52-week high of $9.43 on Jan. 26, after Sprint announced a plan to purchase Tidal on Jan. 23, a music streaming service owned by the famous rapper Jay Z.
The purchase is a way to provide Sprint customers with unique content they cannot access from other wireless carriers, said Erlikh. “It seems like a way to drive customer net additions and make them switch from the other carriers. The main strategy around this is unclear, though,” he added.
For the nine months ended Dec. 31, Sprint’s net loss narrowed to $923 million, or 23 cents per diluted share, from $1.44 billion, or 36 cents per diluted share in the same period a year ago.