Sprint takes $2.1B writedown hit in Q3

Sprint takes $2.1B writedown hit in Q3

06 FEB 2015

Sprint, the third-largest mobile operator in the US, wrote down the value of its brand and wireline network assets to the tune of $2.1 billion in its fiscal Q3 results, with CEO Marcelo Claure admitting that his turnaround plan still had “a long way to go”.

The non-cash impairment charge was mostly attributed to a knockdown in worth of the Sprint trade name – $1.9 billion – with the rest deducted from the value of its wireline kit.

Operating loss for the three months ended December 2014 was a shade over $2.5 billion, compared to $576 million in the year-ago quarter. Strip out the writedown, however, and Sprint says its Q3 operating loss would have improved $169 million year-on-year.

The $2.1 billion impairment charge was keenly felt on the bottom line, too, which was $2.38 billion for Q3 (and so much steeper than the $1 billion net loss registered in the same quarter last year).

Despite the introduction of simpler and cheaper data plans under the relatively new stewardship of Claure (he was appointed in August 2014), Sprint still suffered a 19,000 net loss in postpaid customers during Q3.

At end December 2014, Sprint had a total of 29.9 million postpaid connections, down from 30.8 million 12 months earlier.

Revenue and churn rates continue to deteriorate as well. Sprint posted a turnover of $9.14 billion in Q3 2013, but fell to $8.97 billion in its latest quarterly financial results.

Postpaid churn, on the Sprint platform, was up from 2.07 per cent to 2.3 per cent over the same period.

Encouraging signs
For all the bad news, however, there were some encouraging signs. On the Sprint platform, the operator could manage 30,000 postpaid net additions during Q3. Although not a large number, it was a much improved performance from the previous quarter when it had to endure a net loss of 272,000 postpaid customers.

And the overall net loss of 19,000 postpaid customers during Q3 (which includes Nextel operations) is much improved from the 69,000 loss during Q3 2013.

Q3 revenue was also up $485,000 compared with the previous quarter.

“We are pleased with the growth in sales in the quarter and the improving quality of our customer base as we begin our turnaround plan,” said Claure. “However, we acknowledge there is a long way to go to reach our goals, including lowering our postpaid churn rates to competitive levels. Our network performance continues to improve, and we are now focused on a strategy that will unlock the true potential of our spectrum assets. I am confident that we have the right plan in place to be successful.”

Masayoshi Son, Sprint chairman, added: “I am encouraged by the progress and improving trends in the Sprint business. Marcelo and his team have developed, and are executing against, a clear plan that will make Sprint more competitive and better positioned for long-term growth.”

That plan, however, may well have come too late to preserve Sprint’s status as the third largest mobile operator in the US.

T-Mobile US said it had 55 million subscribers at the end of 2014, about 900,000 shy of Sprint, and continues to grow rapidly. John Legere, the unconventional CEO of T-Mobile US, claimed it was a “done deal” that Sprint would be relegated to fourth position sometime this year.

Author

Ken Wieland

Ken has been part of the MWC Mobile World Daily editorial team for the last three years, and is now contributing regularly to Mobile World Live. He has been a telecoms journalist for over 15 years, which includes eight...More

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