Sprint continues turnaround fight; $2B opex cut confirmed - Mobile World Live

Sprint continues turnaround fight; $2B opex cut confirmed

03 NOV 2015

Sprint saw its Q2 net loss narrow although revenue fell and the company confirmed it will take the axe to a hefty $2 billion in operating expenses in the 2016 financial year.

A second-quarter net loss of $585 million was an improvement over the year-ago net loss of $765 million and the company also had other encouraging metrics to share, including its best-ever postpaid churn and improved net additions.

“This quarter marked an inflection point in our turnaround journey, as we achieved positive postpaid phone net additions for the first time in over two years,” said CEO Marcelo Claure.

“In addition, we set another record low for postpaid churn and improved sequentially in the September quarter, something no US carrier has ever done before.”

However, on one crucial metric, it fell short, as least as far as its rivalry with T-Mobile US is concerned. Sprint has a total of 57.87 million customers compared to T-Mobile US’ 61.2 million, confirming the latter’s grasp on the US third spot.

Sprint also confirmed a plan to reduce operating expenses by $2 billion in fiscal 2016, a move that will involve job cuts, and excludes “any transformation program costs to achieve that run rate benefit”. News of the hefty cut leaked last month.

Another cash-saving move is establishing with SoftBank and others a handset leasing company, which is likely to be ready “in the next few weeks”. Combined with the opex cuts, the handset leasing vehicle and other upcoming financial structures are designed to meet Sprint’s cash needs.

Net operating revenue of $8 billion was a decrease of six per cent year-on-year. The company said a number of factors were behind the fall. Customers are shifting to rate plans associated with device financing options, while postpaid customer losses from prior periods drive down wireless service revenue.

Total service revenue fell by 7.6 per cent to $6.88 billion, although the company argues that when wireless service revenue was added to instalment plan billings and lease revenue then the figure increases slightly from the year ago period.

However, Sprint now expects adjusted EBITDA in fiscal 2016 to be at the low end of the previous expectation of $7.2 billion to $7.6 billion, excluding any impact from the potential sale of certain devices being leased by customers.

The company continues to expect fiscal year 2015 capex to be about $5 billion, excluding the impact of leased devices sold through indirect channels.


Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

Read more