Sprint Reports Fiscal Year 2019 Second Quarter Results

November 04, 2019
  • Wireless service revenue of $5.0 billion
    • Postpaid wireless service revenue of $4.2 billion was stable sequentially and year-over-year
    • Postpaid average revenue per account (ARPA) of $124.81 and postpaid phone average revenue per user (ARPU) of $50.10 were stable sequentially and year-over-year
  • Net loss of $274 million, operating income of $237 million, and adjusted EBITDA* of $2.6 billion
  • Postpaid net additions of 273,000
    • Data device net additions of 364,000 were partially offset by phone net losses of 91,000
    • Average postpaid accounts were stable sequentially and year-over-year for the second consecutive quarter
  • Continued execution of Next-Gen Network plan including True Mobile 5G available in parts of nine major metro areas covering 16 million people
  • Further progress on digitalization initiatives with postpaid gross additions in digital channels increasing more than 40 percent year-over-year

OVERLAND PARK, Kan., Nov. 4, 2019 /PRNewswire/ — Sprint Corporation (NYSE: S) today reported results for the fiscal year 2019 second quarter, including stability in postpaid wireless service revenue and continued growth in postpaid net additions. The company also reported a net loss of $274 million, operating income of $237 million, and adjusted EBITDA* of $2.6 billion.

“I am proud of the resiliency of the Sprint team as they work to deliver results in a challenging environment,” said Sprint CEO Michel Combes. “However, I remain convinced that merging with T-Mobile and building one of the world’s most advanced 5G networks is the best outcome for all consumers, employees, and shareholders.”    

Stable Postpaid Wireless Service Revenue and Continued Focus on Costs
Sprint has focused on growing its relationship with customers by promoting its feature-rich Unlimited Plus and Unlimited Premium rate plans and selling additional devices and value-added services. This strategy delivered postpaid net additions of 273,000 driven by growth in data devices and partially offset by postpaid phone customer losses. Postpaid wireless service revenue of $4.2 billion was relatively flat sequentially and year-over-year, as the company works to stabilize postpaid ARPA and average postpaid accounts.

Total wireless service revenue of $5.0 billion was negatively impacted by lower Lifeline revenue as a result of estimated reimbursements to federal and state governments for subsidies claimed contrary to Sprint’s usage policy and the continued amortization of prepaid contract balances as a result of adopting the new revenue standard last year. Excluding these impacts, total wireless service revenue was relatively stable sequentially and year-over-year.

Net loss of $274 million, operating income of $237 million, and adjusted EBITDA* of $2.6 billion were also negatively impacted by the aforementioned estimated reimbursements to federal and state governments.

The company continued its focus on cost optimization during the quarter by driving year-over-year gross reductions in cost of services and selling, general and administrative expenses, with most of the reductions coming from network optimization and more efficient sales and marketing spend. These reductions have been offset by incremental costs associated with network coverage and capacity improvements, along with other customer experience initiatives.

Additional information about results, including a message from management, is available on our Investor Relations website at www.sprint.com/investors.

Sprint Completes Initial Launch of True Mobile 5G Network
Sprint made continued progress on executing its Next-Gen Network plan.

  • Sprint has 2.5 GHz spectrum deployed on approximately 85 percent of its macro sites.
  • Sprint has approximately 35,000 outdoor small cells deployed including both mini macros and strand mounts.
  • Sprint has continued the rollout of Massive MIMO, a breakthrough technology that improves network capacity, enhances LTE performance, and allows for simultaneous use of spectrum for LTE and 5G. The company has thousands of Massive MIMO sites on-air across the country.

Sprint completed the initial launch of its True Mobile 5G network and recently announced that the service now covers approximately 16 million people within nine metropolitan areas – Atlanta, Chicago, Dallas-Fort Worth, Houston, Kansas City, Los Angeles, New York City, Phoenix and Washington, D.C. In these areas, customers with 5G devices are experiencing dramatically faster speeds, with initial 5G performance results showing a nearly 6X increase in average download speed compared to Sprint LTE.[1] The company is offering 5G capable smartphones from LG, Samsung, and OnePlus, along with a hotspot device from HTC.

Sprint continues to advocate for its merger with T-Mobile to deploy a ubiquitous, nationwide 5G network that includes coverage in rural locations. Sprint’s existing 5G deployment shows the potential of 5G, and the combined company is expected to have the resources and technology to bring that potential to reality by building a 5G network that fuels innovation across every industry, dramatically increasing competition, unleashing new economic growth, and creating thousands of jobs and billions of dollars in U.S. economic value. Together, the combined company is expected to lead the world in next-generation technology services and applications, bringing 5G service to nearly all Americans.

Creating a Digital Disruptor
Sprint continued to enhance its digital capabilities and transform the way it engages with customers. 

  • Postpaid gross additions in digital channels increased more than 40 percent year-over-year.
  • Approximately one of every five postpaid upgrades occurred in digital channels.
  • More than 30 percent of all Sprint customer care web chats are performed by virtual agents using artificial intelligence.
  • The company continued to launch voice-to-digital tools that allow customers calling with specific issues to use a digital self-service option.
  • Web conversions improved and year-to-date orders from digital media more than doubled compared to the same time period last year.

____________________________________
1 Based on analysis by Ookla® of Speedtest Intelligence® data average download speeds for Q3 2019 of 4G LTE and 5G Beta NR results. Ookla® trademarks used under license and reprinted with permission.

Wireless Operating Statistics (Unaudited)

   

 Quarter To Date 

   

 Year To Date 

 

9/30/19

6/30/19

9/30/18

 

9/30/19

9/30/18

Net additions (losses) (in thousands)

           

Postpaid(a)

273

134

109

 

407

232

Postpaid phone

(91)

(128)

(34)

 

(219)

53

Prepaid(a)

(207)

(169)

(14)

 

(376)

(11)

Wholesale and affiliate

(462)

(140)

(115)

 

(602)

(184)

Total wireless net (losses) additions

(396)

(175)

(20)

 

(571)

37

             

End of period connections (in thousands)

           

Postpaid(a) (b)(c)(d)

33,348

33,075

32,296

 

33,348

32,296

Postpaid phone(b) (c)

26,379

26,470

26,813

 

26,379

26,813

Prepaid(a) (b) (c)

8,440

8,647

9,019

 

8,440

9,019

Wholesale and affiliate (c) (d) (e)

12,128

12,590

13,232

 

12,128

13,232

Total end of period connections

53,916

54,312

54,547

 

53,916

54,547

             

Churn

           

Postpaid

1.87%

1.74%

1.78%

 

1.81%

1.71%

Postpaid phone

1.91%

1.78%

1.73%

 

1.84%

1.64%

Prepaid

4.94%

4.23%

4.74%

 

4.58%

4.45%

             

Supplemental data – connected devices

           

End of period connections (in thousands)

           

Retail postpaid

3,718

3,453

2,585

 

3,718

2,585

Wholesale and affiliate

9,585

9,968

10,838

 

9,585

10,838

Total

13,303

13,421

13,423

 

13,303

13,423

             

ARPU(f)

           

Postpaid

$           42.30

$           42.57

$           43.99

 

$           42.43

$           43.77

Postpaid phone

$           50.10

$           49.87

$           50.16

 

$           49.98

$           49.86

Prepaid

$           30.97

$           32.15

$           35.40

 

$           31.57

$           35.83

             

ARPA(g)

           

Average postpaid accounts (in thousands)

11,265

11,208

11,207

 

11,236

11,192

Postpaid ARPA

$         124.81

$         124.89

$         126.55

 

$         124.85

$         125.74

             

 

(a)During the three-month periods ended September 30, 2019 and June 30, 2019, net subscriber additions under the non-Sprint branded postpaid plan offering were 107,000 and 116,000, respectively, and are included in total retail postpaid subscribers above. During the three-month periods ended September 30, 2019 and June 30, 2019, end of period subscribers under the non-Sprint branded postpaid plan offering were 777,000 and 670,000, respectively, and are included in total retail postpaid subscribers above.

(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 from postpaid.

(c)  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.

(d)  During the three-month period ended June 30, 2019,  one of our postpaid customers purchased a wholesale MVNO and as a result, 167,000 subscribers were transferred from the wholesale to postpaid subscriber base.

(e)  On April 1, 2018, approximately 115,000 wholesale subscribers were removed from the subscriber base with no impact to revenue.

(f)  ARPU is calculated by dividing service revenue by the sum of the monthly average number of connections in the applicable service category. Changes in average monthly service revenue reflect connections for either the postpaid or prepaid service category who change rate plans, the level of voice and data usage, the amount of service credits which are offered to connections, plus the net effect of average monthly revenue generated by new connections and deactivating connections.  Postpaid phone ARPU represents revenues related to our postpaid phone connections.

(g)  ARPA is calculated by dividing postpaid service revenue by the sum of the monthly average number of retail postpaid accounts.

 

 

 

Wireless Device Financing Summary (Unaudited)

(Millions, except sales, connections, and leased devices in property, plant and equipment)

   

 Quarter To Date 

   

 Year To Date 

 

9/30/19

6/30/19

9/30/18

 

9/30/19

9/30/18

             

Postpaid activations (in thousands)

3,983

3,475

3,772

 

7,458

7,245

Postpaid activations financed

78%

79%

81%

 

79%

82%

Postpaid activations – operating leases

59%

59%

59%

 

59%

64%

             

Installment plans

           

Installment sales financed

$             433

$              417

$             255

 

$              850

$              468

Installment billings

$             214

$              209

$             292

 

$              423

$              617

Installment receivables, net

$          1,110

$           1,024

$             838

 

$           1,110

$              838

             

Equipment rentals and depreciation – equipment rentals

           

Equipment rentals   

$           1,330

$           1,359

$           1,253

 

$           2,689

$           2,465

Depreciation – equipment rentals

$           1,056

$           1,029

$           1,181

 

$           2,085

$           2,317

             

Leased device additions

           

Cash paid for capital expenditures – leased devices

$           1,786

$           1,516

$           1,707

 

$           3,302

$           3,524

             

Leased devices  

           

Leased devices in property, plant and equipment, net

$           6,378

$           6,424

$           6,184

 

$           6,378

$           6,184

             

Leased device units

           

Leased devices in property, plant and equipment (units in thousands)

15,566

15,762

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