Sprint reported revenue of $8.1 billion for the third quarter of 2015, while sharply narrowing its operating loss for the period to $197 million from $2.54 billion one year ago and adding 501,000 new wireless postpaid customers.
The wireless carrier's third-quarter results, reported Jan. 26, show a company still in transition as it fights competitors like Verizon, AT&T and T-Mobile in a very volatile consumer market.
Sprint's $8.1 billion in revenue for the third quarter, which ended Dec. 31, was down about 10 percent from the $8.97 billion posted for the same quarter one year ago. The non-GAAP net loss in the latest quarter was $836 million, an improvement from $2.38 billion for the same quarter one year ago.
The operating loss of $197 million included $209 million of severance and exit costs, according to the company. The net loss of $836 million amounted to about 21 cents per share, compared with a net loss of about 60 cents per share one year ago.
Sprint reported wireless revenue of $4.8 billion for postpaid customers in the third quarter, down from $5.2 billion for the same quarter one year ago. Prepaid wireless revenue was $1.22 billion in the latest quarter, compared with $1.21 billion one year ago. Total wireless revenue amounted to $7.6 billion for the quarter, compared with $8.4 billion one year ago. The company's wireless operating loss for the quarter was $156 million, compared with a $2.23 billion loss one year ago.
On the customer side, Sprint says it added 501,000 new wireless postpaid net users in the third quarter, up by 471,000 over the same quarter one year ago. Wireless prepaid users were down 491,000, a large change from the net additions of 410,000 one year ago.
Sprint reported a total of 58.4 million connections for the quarter, up from 54.8 million total connections one year ago.
The company's churn rate for the third quarter was 1.62 percent for postpaid customers, down from the 2.30 percent churn rate one year ago, and 5.82 percent for prepaid customers, up from a 3.94 percent rate one year ago.
"It's clear from our quarterly results that we are making great progress on achieving our goals," Sprint CEO Marcelo Claure said in a statement. "Revenue has stabilized, costs are coming out faster than expected, postpaid phone net additions were the highest in three years, postpaid churn was the lowest-ever for a third quarter, and the network is performing at best-ever levels."
Part of the company's year-over-year financial improvement is due to cost reductions, which have totaled almost $800 million so far, Sprint officials said in a statement.
Much of the revenue decline for the quarter compared to last year was due to lower wireless service revenues, primarily related to customer shifts to different rate plans and lower equipment revenues due to a shift from installment billing and subsidized sales, according to Sprint.
In the same quarter one year ago, Sprint added about 967,000 new wireless customers, according to an earlier eWEEK report.
Several wireless analysts told eWEEK that Sprint's third-quarter results were within their expectations.
Bill Menezes, an analyst with Gartner, said that even though the company had to resort to heavy promotional price cutting, it posted good results where it counts by adding postpaid phone customers and reducing its churn rate. "The net postpaid adds figures appear to say Sprint's pricing has convinced a lot of consumers to give it a try, and the churn figure says it's holding on to existing customers, a critical improvement over the trend of the past couple of years," said Menezes.
Jan Dawson, chief analyst of Jackdaw Research, told eWEEK that Sprint's latest figures show "positive trends on the postpaid side continuing, although the prepaid side of the business seems to be weakening further."
Also notable, said Dawson, is that Sprint's "smartphone sales were quite a bit lower in Q4 2015 than they were a year before, which is an interesting indicator for phone vendors, including Apple."
Rob Enderle, principal analyst at Enderle Group, said: "Sprint was pounded due to rumors before the announcement and then significantly beat the street; so the stock is up on the news sharply even though they posted a loss."
Making the situation for Sprint more complicated is that the company needs to "cut costs massively and increase spending on network improvement to stay in business," said Enderle. "While in politics a politician can often get away with promising to cut taxes and increase government benefits, this typically is less successful with investors. Sprint needs an influx of capital badly, and it is not clear to me how they are going to get it."
Avi Greengart, a mobile analyst with Current Analysis, said he noted that while Sprint announced large growth in postpaid wireless customers, it also reported a large drop in prepaid wireless customers. "That should lead to much higher profitability, except that the postpaid gains have been due to aggressive 50 percent off promotions," he wrote. "Worse, Sprint is projecting that these subscribers will pay full prices in two years when the promotions end, but this is hardly guaranteed."
Instead, Greengart said he's not sure why Sprint is assuming that those customers who came to it for its cheaper promotions won't make a similar move to a competitor when the company's promotional rates expire in the future.