Sprint Reports Fiscal Year 2018 Fourth Quarter And Full Year Results

May 07, 2019

OVERLAND PARK, Kan., May 7, 2019 /PRNewswire/ —

  • Fiscal year 2018 wireless service revenue stabilized year-over-year, excluding the impact of the new revenue recognition standard
    • Fiscal fourth quarter wireless service revenue grew 1 percent year-over-year
  • Fiscal year 2018 net loss of $1.9 billion and operating income of $398 million both include a preliminary non-cash charge of $2 billion; Adjusted EBITDA* of $12.8 billion
    • Fiscal fourth quarter net loss of $2.2 billion, operating loss of $1.7 billion, and adjusted EBITDA* of $3.1 billion
  • Fiscal year 2018 postpaid net additions of 710,000 improved by 286,000 year-over-year
    • Data device net additions of 872,000 were partially offset by phone net losses of 162,000
    • Fiscal fourth quarter postpaid net additions of 169,000 driven by data device net additions of 358,000 and phone net losses of 189,000
  • Continued progress on Next-Gen Network deployment
    • Mobile 5G network to launch in select cities in the coming weeks
  • Strong momentum on digitalization initiatives
    • Postpaid gross additions in digital channels increased approximately 60 percent year-over-year in both the fourth quarter and for the full year

Sprint Corporation (NYSE: S) today reported results for the fiscal year 2018 fourth quarter and full year, including a stabilization of wireless service revenue and continued growth in postpaid net additions. The company reported a net loss of $1.9 billion and operating income of $398 million, both of which included a preliminary non-cash charge of $2 billion, along with adjusted EBITDA* of $12.8 billion in fiscal year 2018. 

“Sprint delivered on its plan for fiscal 2018, as we met all of our financial guidance for the year,” said Sprint CEO Michel Combes. “While we’ve made progress, there are certainly continued challenges to address, which will continue to put pressure on our service revenue and retail customer growth.” 

 

 

Wireless Service Revenue Stabilized and Cost Reduction Targets Achieved
Sprint has focused on growing revenue per customer with additional devices and value-added services. This strategy produced 710,000 postpaid net additions for the year, an improvement of 286,000 year-over-year that was driven by growth in data devices, which offset losses in postpaid phone customers. This growth, along with a slowing decline in postpaid ARPU, contributed to the stabilization of wireless service revenue at $22.5 billion for the year, excluding the impact of the new revenue recognition standard.

Sprint achieved both its gross and net cost reduction targets in fiscal year 2018. Excluding the impact of the new revenue recognition standard and approximately $350 million of merger-related costs, the company delivered approximately $1.2 billion of combined year-over-year gross reductions in cost of services and selling, general and administrative (SG&A) expenses during fiscal year 2018 and approximately $330 million of net reductions after reinvestments in network and other operational initiatives. While the company continues to look for opportunities to improve operational and cost efficiencies in fiscal 2019, these improvements are expected to be fully offset by incremental costs associated with network and customer experience initiatives.

Net loss of $1.9 billion for the year compared to net income of $7.4 billion in the prior year, as fiscal year 2018 included a preliminary non-cash goodwill impairment charge of $2 billion and fiscal year 2017 results included a $7.1 billion non-cash benefit from tax reform.

The new revenue recognition standard had a positive impact on reported net income of $146 million and $678 million in the fiscal year 2018 fourth quarter and full year, respectively. The new standard also had a positive impact on reported operating income and adjusted EBITDA* of $185 million and $858 million in the fiscal year 2018 fourth quarter and full year, respectively.

(Millions, except per share data)

Fiscal 4Q18

Fiscal 4Q17

Change

 

Fiscal 2018

Fiscal 2017

Change

Net (loss) income attributable to Sprint

($2,174)

$69

($2,243)

 

($1,943)

$7,389

($9,332)

Basic (loss) income per share

($0.53)

$0.02

($0.55)

 

($0.48)

$1.85

($2.33)

Operating (loss) income

($1,674)

$236

($1,910)

 

$398

$2,727

($2,329)

Adjusted EBITDA*

$3,136

$2,768

$368

 

$12,773

$11,069

$1,704

Net cash provided by operating activities

$2,847

$2,653

$194

 

$10,429

$10,062

$367

Adjusted free cash flow*

($539)

($240)

($299)

 

($914)

$945

($1,859)

 

Network Deployment Continues with Mobile 5G Launch Coming Soon  
Sprint made continued progress in the quarter on executing its Next-Gen Network plan.

  • Sprint now has 2.5 GHz spectrum deployed on approximately 80 percent of its macro sites.
  • Sprint currently has approximately 30,000 outdoor small cells deployed including both mini macros and strand mounts.
  • Sprint has deployed approximately 1,500 Massive MIMO radios, which increase the speed and capacity of the LTE network and, with a software upgrade, will provide mobile 5G service in select cities in the coming weeks.

Standards-based 5G is currently on-air in select locations, with commercial service expected to launch in the coming weeks. Chicago, Atlanta, Dallas and Kansas City are expected to be among the first cities to offer commercial 5G service; with Houston, Los Angeles, New York City, Phoenix and Washington D.C. slated to launch by the end of June. The total initial 5G coverage footprint across all nine cities is expected to be more than 1,000 square miles. The company has also announced standards-based 5G devices from LG, HTC, and Samsung that will be available soon.

Building a Digital Disruptor
Sprint continued to leverage digital capabilities to transform the way it engages with customers. 

  • Postpaid gross additions in digital channels increased approximately 60 percent year-over-year in both the fiscal fourth quarter and for the full fiscal year. Additionally, the company exited the year with nearly 20 percent of postpaid upgrades occurring in a digital channel.
  • Approximately 30 percent of all Sprint customer care chats are now performed by virtual agents using artificial intelligence.
  • Web conversions improved while online media spend and cost per click were down year-over-year.

Conference Call and Webcast

  • Date/Time: 4:30 p.m. (ET) Tuesday, May 7, 2019
  • Call-in Information
    • U.S./Canada: 866-360-1063 ID: 4660559
    • International: 443-961-0242 ID: 4660559
  • Webcast available at www.sprint.com/investors
  • Additional information about results is available on our Investor Relations website

 

Wireless Operating Statistics (Unaudited)

   

 Quarter To Date 

   

 Year To Date 

 

3/31/19

12/31/18

3/31/18

 

3/31/19

3/31/18

Net additions (losses) (in thousands)

           

Postpaid(a)

169

309

39

 

710

424

Postpaid phone(a)

(189)

(26)

55

 

(162)

606

Prepaid

(30)

(173)

170

 

(214)

363

Wholesale and affiliate

(147)

(88)

(165)

 

(419)

81

Total wireless net (losses) additions

(8)

48

44

 

77

868

             

End of period connections (in thousands)

           

Postpaid(a) (b) (d) (e) 

32,774

32,605

32,119

 

32,774

32,119

Postpaid phone(a) (b) (d)

26,598

26,787

26,813

 

26,598

26,813

Prepaid(a) (b) (c) (d) (f) (g)

8,816

8,846

8,989

 

8,816

8,989

Wholesale and affiliate (c) (d) (h)

12,897

13,044

13,517

 

12,897

13,517

Total end of period connections

54,487

54,495

54,625

 

54,487

54,625

             

Churn

           

Postpaid

1.81%

1.85%

1.78%

 

1.77%

1.74%

Postpaid phone

1.82%

1.84%

1.68%

 

1.74%

1.62%

Prepaid

4.37%

4.83%

4.30%

 

4.53%

4.58%

             

Supplemental data – connected devices

           

End of period connections (in thousands)

           

Retail postpaid

3,121

2,821

2,335

 

3,121

2,335

Wholesale and affiliate

10,384

10,563

11,162

 

10,384

11,162

Total

13,505

13,384

13,497

 

13,505

13,497

             

ARPU(i)

           

Postpaid

$           43.25

$           43.64

$           44.40

 

$           43.60

$           45.70

Postpaid phone

$           50.18

$           50.01

$           50.44

 

$           49.98

$           51.98

Prepaid

$           33.67

$           34.53

$           37.15

 

$           34.98

$           37.67

             

NON-GAAP RECONCILIATION – ABPA* AND ABPU* (Unaudited)

(Millions, except accounts, connections, ABPA*, and ABPU*)

 

Quarter To Date

 

 Year To Date 

 

3/31/19

12/31/18

3/31/18

 

3/31/19

3/31/18

ABPA*

           

Postpaid service revenue

$           4,231

$           4,236

$           4,270

 

$         16,910

$         17,396

Add: Installment plan and non-operating lease billings 

273

306

368

 

1,257

1,512

Add: Equipment rentals

1,359

1,313

1,136

 

5,137

4,048

Total for postpaid connections

$           5,863

$           5,855

$           5,774

 

$         23,304

$         22,956

             

Average postpaid accounts (in thousands)

11,184

11,196

11,259

 

11,191

11,260

Postpaid ABPA*(j)

$         174.75

$         174.32

$         171.38

 

$         173.54

$         169.99

               

Quarter To Date

 

 Year To Date 

 

3/31/19

12/31/18

3/31/18

 

3/31/19

3/31/18

Postpaid phone ABPU*

           

Postpaid phone service revenue

$           4,012

$           4,014

$           4,048

 

$         16,041

$         16,463

Add: Installment plan and non-operating lease billings 

213

253

324

 

1,052

1,349

Add: Equipment rentals

1,354

1,307

1,126

 

5,112

4,003

Total for postpaid phone connections

$           5,579

$           5,574

$           5,498

 

$         22,205

$         21,815

             

Postpaid average phone connections (in thousands)

26,652

26,751

26,754

 

26,746

26,394

Postpaid phone ABPU* (k)

$           69.79

$           69.45

$           68.51

 

$           69.19

$           68.88

             

(a)During the three-month period ended March 31, 2018, a non-Sprint branded postpaid offering was introduced allowing prepaid customers to purchase a device under our installment billing program. As a result of the extension of credit, approximately 167,000 prepaid subscribers were migrated from the prepaid subscriber base into the postpaid subscriber base. In addition, net subscriber additions under the non-Sprint branded postpaid offering were 44,000 during the three-month period ended March 31, 2018.

(b)During the three-month period ended June 30, 2018, we ceased selling devices in our installment billing program under one of our brands and as a result, 45,000 subscribers were migrated back to prepaid.

(c)Sprint is no longer reporting Lifeline subscribers due to regulatory changes resulting in tighter program restrictions. We have excluded them from our customer base for all periods presented, including our Assurance Wireless prepaid brand and subscribers through our wholesale Lifeline MVNOs.

(d)  As a result of our affiliate agreement with Shentel, certain subscribers have been transferred from postpaid and prepaid to affiliates. During the three-month period ended June 30, 2018, 10,000 and 4,000 subscribers were transferred from postpaid and prepaid, respectively, to affiliates. During the three-month period ended March 31, 2018, 29,000 and 11,000 subscribers were transferred from postpaid and prepaid, respectively, to affiliates. During the three-month period ended June 30