Sprint Q1 Loss Narrows, But Records Customer Defections

(RTTNews) - Wireless carrier Sprint Corp. (S) on Tuesday reported a loss for the first quarter that narrowed from last year on slightly higher revenues and lower expenses. However, the company also recorded wireless subscriber losses in the quarter.

Sprint, which merged with Japan's Softbank Corp. (SFTBF.PK, SFTBY.PK) in 2013, has changed its fiscal year end to March 31. As a result, Sprint's transition period is comprised of the three-month period of January 1, 2014 through March 31, 2014.

Sprint's net loss for the first quarter was $151 million or $0.04 per share, narrower than loss of $643 million or $0.21 per share in the year-ago period.

Adjusted earnings before interest, tax, depreciation and amortization or EBITDA grew 21 percent from the year-ago quarter to $1.84 billion.

The increase was primarily driven by growth in wireless adjusted EBITDA, reflecting lower wireless expenses such as postpaid subsidy associated with impacts of the newly launched Sprint Easy Pay installment billing plan and device sales mix, lower customer care and cost of service expenses.

Adjusted EBITDA margin rose to 23.4 percent from 19.1 percent in the prior-year period and was the highest in almost six years.

Net operating revenues for the quarter rose 1 percent to $8.88 billion from $8.79 billion in the year-ago period.

Net operating expenses declined 3 percent to $8.46 billion from $8.76 billion in the prior-year period.

In the Wireless business, net operating revenues rose 2 percent from the prior-year quarter to $8.25 billion.

Sprint reported a net loss of 231,000 postpaid subscribers in the quarter, compared to net additions of 12,000 subscribers in the prior-year quarter.

The subscriber losses were largely due to expected elevated churn levels related to service disruption associated with the company's ongoing network overhaul.

Total retail postpaid churn was 2.18 percent, compared to 2.09 percent in the year-ago period.

Sprint platform prepaid net loss of 364,000 customers was primarily caused by changes in the Lifeline program recertification process that impacted the Assurance Wireless subscriber base. This compares to prepaid net additions of 568,000 customers in the same period last year.

Total retail postpaid average revenue per user or ARPU edged up to $62.98 from $62.47 in the prior-year period.

Total wireless net losses in the quarter were 467,000, compared to net loss of 415,000 last year.

Meanwhile, wireline segment revenues for the quarter declined 14 percent from the year-ago period to $770 million.

Looking ahead, Sprint now expects 2014 adjusted EBITDA to be between $6.7 billion and $6.9 billion, up from the prior range of $6.5 billion to $6.7 billion. The company continues to project capital expenditure for the year of about $8 billion.

Sprint noted that its 4G LTE coverage is now available to more than 225 million people. The company expects the coverage to reach 250 million people by mid-year.

Additionally, Sprint's replacement of its entire 3G and voice network and the nationwide roll-out of high-definition voice service are both expected to be largely complete by mid-year.

S closed Monday's trading at $7.43. In Tuesday's pre-market, the stock is adding $0.24 or 3.23 percent to $7.67.