Sprint Q3 Loss Narrows, Plans To Cut $2 Bln Of Costs In FY16; Stock Down

(RTTNews) - Sprint Corp. (S) reported that its net loss for the third-quarter narrowed from last year. It plans to achieve a sustainable reduction of $2 billion or more of run rate operating expenses in fiscal 2016, excluding any transformation program costs to achieve that run rate benefit.

In the pre-market trade, S is currently trading at $4.46, down $0.39 or 8.04%.

Including transformation program costs, the company now expects fiscal year 2015 Adjusted EBITDA to be at the low end of the previous expectation of $7.2 billion to $7.6 billion. This excludes any impacts from the potential sale of certain devices being leased by our customers.

The company continues to expect fiscal year 2015 cash capital expenditures to be approximately $5 billion, excluding the impact of leased devices sold through indirect channels.

Net loss for the quarter narrowed to $585 million or $0.15 per share, from $765 million, or $0.19 per share, in the year-ago period.

Total net additions were 1.1 million compared to 590,000 in the prior year quarter - an improvement of 466,000 year-over-year.

Postpaid net additions of 553,000 compared to net losses of 272,000 in the prior year quarter - an improvement of 825,000 year-over-year. During the quarter 199,000 prepaid customers with consistent payment history migrated to postpaid, with 175,000 of these migrations now included as postpaid customers under their respective Boost and Virgin brands. Excluding total migrations from prepaid, postpaid net additions would have been 354,000 and improved by 626,000 year-over-year.

Net operating revenues of $8 billion decreased six percent year-over-year, as customer shifts to rate plans associated with device financing options and postpaid phone customer losses from prior periods drove lower wireless service revenues. Wireless service revenues plus installment plan billings and lease revenue of $7.1 billion increased slightly from the prior year period.

Consolidated Adjusted EBITDA of $2 billion grew 45 percent from the prior year period, as expense reductions more than offset the decline in service revenues. Total expenses improved primarily due to lower cost of product expenses related to device leasing options for which the associated cost is recorded as depreciation expense and lower bad debt expense as a result of a higher acquisition mix of prime credit quality customers in recent quarters.

Sprint said it continues to work toward utilizing its assets to help fund the business and fuel future growth. The company has made significant progress working with SoftBank and others to establish a handset leasing company and expects to close in the next few weeks.

In combination with the plans for significant operating expense reductions, Sprint expects the handset leasing company and other upcoming financing structures to sufficiently meet the company's cash needs for the foreseeable future.