Sprint swung to a net loss in its fiscal Q2 (ended 30 September), as it set aside funds to repay millions of dollars-worth of government subsidies allegedly collected in error, and lost post-paid phone subscribers.
While CFO Andrew Davies said the subsidy issue was “immaterial” to Sprint’s earnings in the quarter, he conceded provisions made to reimburse federal and state governments along with lower revenue from the subsidies themselves contributed to the earnings slide.
He was referring to a government programme named Lifeline, which subsidises the cost of mobile service for low-income users. Officials in September accused Sprint of erroneously collecting funds for 885,000 unqualified subscribers, with the operator pledging to repay the monies.
During the quarter, Sprint lost 91,000 post-paid phone subscribers, far higher than the 34,000 lost in the comparable period of calendar 2018. The prepaid segment fared even worse, with 207,000 subscribers lost compared to 14,000.
The impact of all this was plain: the operator slid from a $207 million profit in fiscal Q2 2018 to a loss of $274 million, on revenue of $7.8 billion, which was down 7 per cent.
Its fiscal H1 figures followed the same trend, with a loss of $385 million compared with a $372 million profit, on revenue of $15.9 billion down from $16.6 billion.Subscribe to our daily newsletter Back