eWEEK content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.
Sprint’s net operating revenue rose in the second quarter of 2016 to $8.25 billion, up 3 percent from $8 billion one year ago, as the company saw year-over-year net operating revenue growth for the first time in two years.
The company is still losing money, however, though its net loss for the second quarter narrowed to $142 million, down from a $585 million loss for the same quarter in 2015. The loss per share for the second quarter is 4 cents per share, compared with a loss of 15 cents per share in 2015.
Also boosting the company’s second-quarter earnings report, which was announced Oct. 25, are the 347,000 postpaid net add phone customers that Sprint brought in, which is up from the 173,000 postpaid phone net adds in the prior quarter and five times more than the 62,000 postpaid phone net adds announced by the telecom one year ago. The postpaid phone net churn rate fell to 1.37 percent in the quarter, from 1.49 percent one year prior.
Sprint said it now has 60.1 million overall wireless customers, which is up from 57.9 million a year prior.
“The good news is Sprint continues to add net smartphone customers and take them away from AT&T and Verizon,” Bill Menezes, an analyst with Gartner, told eWEEK. “Their turnaround in this respect is looking more sustainable with each passing quarter, and their net losses continue shrinking.”
On the other hand, said Menezes, “Sprint has had to essentially mortgage spectrum assets to raise money for its continued network transformation, and its financial improvement will need to continue in order to not only support the new debt but also finance the promotional activity it will need to do to keep from slipping further behind T-Mobile.”
“We took another step forward in our plan toward sustainable profitability and cash generation with this quarter’s results,” Sprint CEO Marcelo Claure said in a statement. “The top line is now growing, we continue to take costs out of the business, and we are successfully raising money at materially lower rates to reduce our future cash interest expenses.”
Sprint, which has consistently been losing large amounts of money for a decade, secured about $5.3 billion in cash in April by selling cellular network assets in two separate lease-back deals as it continues to try to reverse its longtime losses, build up cash reserves and return to profitability. The deals involved selling existing cell tower gear, which will then be bought back in 2018 when the company projects its financial standing will be improved, according to earlier eWEEK stories.
Sprint did, however, lose 427,000 prepaid net phone customers in the second quarter, which Menezes said is a challenge for the telecom. “Sprint has lost a ton of prepaid customers and is adding fewer wholesale/affiliate net adds than it did so far in its last fiscal year,” he said. “Another area to watch where it could be falling further behind T-Mobile [is that] MetroPCS [is] taking customers from Boost Mobile and the like.”
Another analyst, Charles King of Pund-IT, told eWEEK that “Sprint’s results for the quarter were mixed, but still generally positive.”
The gain of 347,000 postpaid net add phone customers was good, but the loss of 427,000 prepaid phone customers was a step backward, he said. At the same time, Sprint continues to execute an aggressive strategy of reducing its capital expenditures, which allowed its CEO to tout Sprint’s overall progress, according to King.
“Many analysts disagree with that approach, citing concerns that the company cost-cutting is impacting its ability to pursue needed network upgrades,” he said. “Overall, management’s attempts to stabilize Sprint appear to be paying off but the company is still the weakest of the four major wireless carriers and is likely to remain in that position for some time to come.”
Jan Dawson, chief analyst with Jackdaw Research, said that even though the company gained postpaid net add phone customers, “their prepaid business is hemorrhaging subscribers, in part because they’re shifting subscribers over to postpaid.”
Dawson said he doesn’t “see any meaningful change in the long-term trajectory, and their lack of investment recently in the network is worrying, too.”
Jeff Kagan, an independent telecom analyst, said Sprint’s earnings “are starting to show real growth,” which is what he expected after the company’s 2013 acquisition by Softbank. “They are fixing everything that went wrong in the past and starting what hopefully will be a long-term growth curve. I expect Sprint to take the same growth curve as T-Mobile, which had an earlier start.”