Sprint reported quarterly results which Marcelo Claure, its recently installed president and CEO, said indicate that while its transformation is underway, “clearly we have not turned the corner”.
“While the company continues to face headwinds, we have begun the first phase of our plan and are encouraged with the early results. Every day we are focused on improving our standing with consumers, improving our network and controlling our costs,” Claure commented in a statement.
With Sprint looking for $1.5 billion of annualised cost reduction compared to 2014 spending levels, unsurprisingly there will be more blood on the carpet. The company yesterday announced an additional headcount cut of around 2,000 positions, as it looks to save $400 million on staff costs on an annualised basis.
Describing the Sprint brand on his arrival as “weak”, Claure said “it was clear to me we needed to act quickly and decisively”.
Worryingly, the company is continuing to lose lucrative contract customers. It lost 272,000 postpaid users from its Sprint platform operation in the quarter, with the gain of 35,000 prepaid and 827,000 wholesale and affiliate subscribers keeping its customer numbers in the black.
The period also included the “most successful iPhone launch in company history”, with two and a half times as many customers upgrading to the new model compared to previous new iPhones.
For the quarter, Sprint reported a net loss of $765 million, compared with a prior-year profit of $383 million, on revenue of $8.49 billion, down 2.2 per cent from $8.68 billion. Its operating loss of $192 million was narrowed from a $398 million loss last year.
Last year’s operating loss included reduced depreciation and amortisation costs, due to accelerated CDMA network-related depreciation in the prior-year period.
The company’s outlook for the current quarter is also hardly optimistic. It said that “given the success of the new offers”, it expects increased selling costs associated with higher gross additional and upgrade volumes.
And “the significant loss of postpaid phone customers over the last few quarters has pressured wireless service revenue, and this trend is expected to continue into the next quarter”.
Sprint said it expects capital expenditure to be “under $6 billion” for the 2014 calendar year. Its LTE network covers 260 million people in more than 500 cities, while the reach of its 2.5GHz LTE network is expected to hit 100 million people by the end of 2014.