Sprint Reports Fiscal Year 2019 Third Quarter Results

January 27, 2020

OVERLAND PARK, Kan., Jan. 27, 2020 /PRNewswire/ —

  • Wireless service revenue of $5.2 billion
    • Postpaid wireless service revenue of $4.2 billion was stable sequentially and year-over-year
    • Postpaid average revenue per account (ARPA) of $124.80 and postpaid phone average revenue per user (ARPU) of $50.37 were stable sequentially and year-over-year
  • Net loss of $120 million, operating income of $66 million, and adjusted EBITDA* of $2.5 billion
  • Postpaid net additions of 494,000
    • 10th consecutive quarter of net additions
    • Data device net additions of 609,000 were partially offset by phone net losses of 115,000
    • Average postpaid accounts of 11.3 million grew sequentially and year-over-year for the third consecutive quarter
  • Digital capabilities driving higher sales, better customer experience, and cost efficiencies
    • Postpaid gross additions in digital channels increased 80 percent year-over-year
    • More than 25 percent of all targeted customer care web chats are performed by virtual agents using artificial intelligence
  • Continued execution of Next-Gen Network plan
    • Second fastest network and most improved operator based on national average download speeds
    • True Mobile 5G coverage expanded to 20 million people

Sprint Corporation (NYSE: S) today reported results for the fiscal year 2019 third quarter, including stability in postpaid wireless service revenue and continued growth in postpaid net additions. The company also reported a net loss of $120 million, operating income of $66 million, and adjusted EBITDA* of $2.5 billion.     

“I continue to be impressed by the commitment of Sprint employees to deliver results during this period of uncertainty,” said Sprint CEO Michel Combes. “As we await a decision in the state attorneys general lawsuit, I continue to believe the merger with T-Mobile is the best way to deliver the benefits of competition to American consumers.”    

Stable Wireless Service Revenue and Cost Optimization
Postpaid wireless service revenue of $4.2 billion remained stable sequentially and year-over-year as Sprint continued to focus on promoting its feature-rich Unlimited Plus and Unlimited Premium rate plans, selling additional data devices, and being more selective in its acquisition of postpaid phone customers. Postpaid net additions of 494,000 and average postpaid accounts of 11.3 million improved sequentially and year-over-year, while postpaid ARPA of $124.80 remained stable.

Total wireless service revenue of $5.2 billion was negatively impacted by the continued amortization of prepaid contract balances as a result of adopting the new revenue standard last year, while the year-ago period included Lifeline revenue related to federal and state government subsidies claimed as a result of an inadvertent coding error. Adjusting for these impacts, total wireless service revenue was stable year-over-year and sequentially.

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. These reductions have been offset by incremental costs associated with network coverage and capacity improvements, along with other customer experience initiatives.

Digital Capabilities Driving Higher Sales, Better Customer Experience, and Cost Efficiencies
Sprint continued to enhance its digital capabilities and transform the way it engages with customers. 

  • Postpaid gross additions in digital channels increased 80 percent year-over-year.
  • Postpaid upgrades in digital channels increased more than 40 percent year-over-year.
  • More than 25 percent of all targeted customer care web chats are performed by virtual agents using artificial intelligence.
  • Web conversions improved and orders from digital media more than doubled year-over-year.

These digital initiatives have contributed to more efficient acquisition of new customers, along with lower customer care costs.

Network Improves and True Mobile 5G Coverage Expands to 20 Million People
Sprint made continued progress on executing its focused Next-Gen Network plan.

  • Sprint has 2.5 GHz spectrum substantially deployed on its existing macro sites.
  • The company 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 has approximately 37,000 outdoor small cells deployed including both mini macros and strand mounts.

These deployments have driven performance improvements and increased capacity in Sprint’s network, as seen in Ookla Speedtest Intelligence data which shows Sprint having the second fastest network[1] and being the most improved operator in calendar 2019 with a 45 percent year-over-year increase in its national average download speeds.[2] Additionally, the company is focused on improving the end-to-end network quality for its customers.

Sprint expanded its True Mobile 5G network coverage to approximately 20 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 Sprint’s average 5G download speed of 215 Mbps more than 5X faster than Sprint LTE.[3]

Additional Information

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

1 Based on analysis by Ookla® of Speedtest Intelligence® data average download speeds from Q4 2019 for All Mobile Results. Ookla® trademarks used under license and reprinted with permission.
2 Based on analysis by Ookla® of Speedtest Intelligence® data average download speeds from December 2018 to December 2019 for All Mobile Results. Ookla® trademarks used under license and reprinted with permission.
3 Based on analysis by Ookla® of Speedtest Intelligence® data average download speeds for December 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 

 

12/31/19

9/30/19

12/31/18

 

12/31/19

12/31/18

Net additions (losses) (in thousands)

           

Postpaid(a)

494

273

309

 

901

541

Postpaid phone

(115)

(91)

(26)

 

(334)

27

Prepaid(a)

(174)

(207)

(173)

 

(550)

(184)

Wholesale and affiliate

(71)

(462)

(88)

 

(673)

(272)

Total wireless net additions (losses)

249

(396)

48

 

(322)

85

             

End of period connections (in thousands)

           

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

33,842

33,348

32,605

 

33,842

32,605

Postpaid phone(b) (c)

26,264

26,379

26,787

 

26,264

26,787

Prepaid(a) (b) (c)

8,266

8,440

8,846

 

8,266

8,846

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

12,057

12,128

13,044

 

12,057

13,044

Total end of period connections

54,165

53,916

54,495

 

54,165

54,495

             

Churn

           

Postpaid

1.98%

1.87%

1.85%

 

1.87%

1.75%

Postpaid phone

2.06%

1.91%

1.84%

 

1.91%

1.71%

Prepaid

4.92%

4.94%

4.83%

 

4.70%

4.58%

             

Supplemental data – connected devices

           

End of period connections (in thousands)

           

Retail postpaid

4,050

3,718

2,821

 

4,050

2,821

Wholesale and affiliate

9,419

9,585

10,563

 

9,419

10,563

Total

13,469

13,303

13,384

 

13,469

13,384

             

ARPU(f)

           

Postpaid

$           42.02

$           42.30

$           43.64

 

$           42.29

$           43.73

Postpaid phone

$           50.37

$           50.10

$           50.01

 

$           50.11

$           49.91

Prepaid

$           29.63

$           30.97

$           34.53

 

$           30.93

$           35.40

             

ARPA(g)

           

Average postpaid accounts (in thousands)

11,295

11,265

11,196

 

11,256

11,193

Postpaid ARPA

$         124.80

$         124.81

$         126.14

 

$         124.83

$         125.87

             

(a)During the three and nine-month periods ended December 31, 2019, net subscriber additions under the non-Sprint branded postpaid plan offering were 108,000 and 331,000, respectively, and are included in total retail postpaid subscribers above. As of December 31, 2019, end of period subscribers under the non-Sprint branded postpaid plan offering were 885,000 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.During the three-month period ended December 31, 2018, an additional 100,000 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 

 

12/31/19

9/30/19

12/31/18

 

12/31/19

12/31/18

             

Postpaid activations (in thousands)

4,773

3,983

4,462

 

12,231

11,707

Postpaid activations financed

80%

78%

81%

 

79%

82%

Postpaid activations – operating leases

61%

59%

63%

 

60%

64%

             

Installment plans

           

Installment sales financed

$              541

$             433

$             357

 

$           1,391

$             825

Installment billings

$              230

$             214

$             251

 

$              653

$             868

Installment receivables, net

$           1,250

$           1,110

$             894

 

$           1,250

$             894

             

Equipment rentals and depreciation – equipment rentals

           

Equipment rentals   

$           1,292

$           1,330

$           1,313

 

$           3,981

$           3,778

Depreciation – equipment rentals

$           1,011

$           1,056

$           1,137

 

$           3,096

$           3,454

             

Leased device additions

           

Cash paid for capital expenditures – leased devices

$           2,147

$           1,786

$           2,215

 

$           5,449

$           5,739

             

Leased devices  

           

Leased devices in property, plant and equipment, net

$           6,748

$           6,378

$           6,683