Sprint mulls M&A options amid first profit in 3 years - Mobile World Live

Sprint mulls M&A options amid first profit in 3 years

01 AUG 2017

Sprint CEO Marcelo Claure said the company had “many options” for its future, but remained tight lipped on potential suitors as it recorded a quarterly profit for the first time in three years.

Speaking to investors at the release of its fiscal Q1 results – for the three months to end-June – Claure said the company had been in “discussions with everybody”, including some parties from outside of the industry. An announcement is expected in the near future.

In recent weeks, Sprint was linked to cash injections from top-US investors, a tie up with Charter Communications and continued speculation about T-Mobile.

Earlier this week, Charter Communications revealed it had turned down a deal for Sprint, a move Claure was surprised by as he claimed the cable company had never been offered a deal to buy the operator.

Turnaround plans
During the company’s fiscal Q1, the company reported net income of $206 million due – in part – to its ongoing programme to slash overheads. During the same period in 2016, it recorded a net loss of $302 million.

Sprint is still in the process of an efficiency drive. Compared to fiscal Q1 2016, it shed $370 million from its selling, general and administrative costs in the recent period. According to the company’s earnings statement, cost-cutting measures taken over the last nine quarters had saved almost $4 billion.

Claure announced plans to cut $2 billion in operating expenses in November 2015, with most of the impact expected during the 2016 financial year. CFO Tarek Robbiati said the company was continuing to assess its cost base and was looking at making further efficiency savings “from 2018 and beyond”.

Competitive market
Although its financial performance was positive, the company lost 39,000 post paid subscribers during the quarter – compared to gains of 180,000 in 2016. By end-June, the company had a contract base of 31.5 million.

This was offset by increases in its wholesale and affiliate divisions, where connections increased 65,000 during the quarter to 13.4 million.

In its fiscal Q1, the company arrested a decline in its prepaid numbers, driven by growth in its higher-tier Boost Mobile brand. It added 35,000 connections compared to the loss of 306,000 during fiscal Q1 2016. Its prepaid base stood at 13.4 million by end-June.

Claure attributed its post pay Q1 churn to the “hyper-competitive” US market, which saw Verizon and AT&T heavily promote unlimited tariffs.

“Every time a new carrier launches a new promotion that causes the market to shift,” he said adding: “We saw that when Verizon launched unlimited. Now things are back to normal. In July, we have already 115,000 net adds.”


Chris Donkin

Chris joined the Mobile World Live team in November 2016 having previously worked at a number of UK media outlets including Trinity Mirror, The Press Association and UK telecoms publication Mobile News. After spending 10 years in journalism, he moved...

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