Aggressive promotions helped Sprint add more customers than expected in its fiscal Q1, but CEO Michel Combes said on an earnings call the operator will increasingly focus on profitability as it moves toward a 5G launch in early 2019.
Post paid subscriber net additions of 87,000 in the three months to end-June beat analyst predictions and were broadly in line with the 88,000 Sprint added in the comparable period of fiscal 2017. While Combes said Sprint expects to continue adding subscribers, he noted a recent shift to higher-priced unlimited tariffs could put pressure on additions going forward.
The pricing change is part of Sprint’s plan to bring in more cash as it increases spending for 5G deployments. After several quarters of steep promotions, the operator now feels “it is important to balance growth and profitability as we significantly increase the capital investments in our network,” Combes explained.
Revenue in fiscal Q1 declined $32 million year-on-year to $8.1 billion, while net income dropped from $206 million to $176 million.
Capex of $1.1 billion was down slightly from $1.2 billion in fiscal Q1 2017, but up $350 million sequentially. Combes said sequential increases are expected to continue, amounting to a total for the fiscal year of between $5 billion and $6 billion.
Sprint said the 2.5GHz spectrum it plans to use for its 5G service is now live in two-thirds of its macro sites, compared with just under half of its sites in early November 2017.
During fiscal Q1 2018, the operator also added 7,000 strand mount 2.5GHz small cells on cable infrastructure via agreements with operators Altice USA and Cox Communications. Those additions brought the total number of small cells in operation to more than 15,000.
Sprint CTO John Saw reiterated the operator’s plans to use Massive MIMO technology for its 5G launch and said a small number of sites are already running commercial LTE traffic in the network.
He noted on the call early results have been encouraging: “The lynchpin for Sprint to launch 5G is Massive MIMO and from the very early results we have seen with the sites we have deployed we’re seeing the expected benefits, with some pleasant surprises in terms of how much it improved the uplink performance and the coverage sites.”
Combes said the technology yielded more than a 300 per cent increase in speeds in preliminary testing.