Among early Street responses, Citigroup’s Michael Rollins, who has a Neutral rating on the shares, and a $4.75 price target, writes that the “progress on cost cutting continued, and postpaid gross additions were better than expected while churn was largely in-line”.
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Sprint added 173,000 net postpaid (contract) subscribers in the first quarter, up from a net loss of 12,000 in the prior year quarter. Average revenue per user (ARPU) on the Sprint platform fell by about $4 per month for postpaid subscribers and by about $0.50 per prepaid customer compared with the first quarter of 2015.
In comparable terms, the wireless services provider achieved savings worth $550 million in cost of services and selling, general, and administrative (SG&A) expenses, as part of its continuing efforts to alter the cost structure.
Adjusted EBITDA was $2.5 billion. The Sprint platform’s postpaid churn was 1.56% in the quarter, which was flat with previous year. Operating income declined to $361 million from $501 million in last year’s first fiscal quarter. The bottom-line outstandingly exceeded the $0.08 consensus forecast. Wireless net operating revenues grew 1 percent year-over-year and postpaid wireless service revenues have remained at $4.8 billion for the last three quarters.
The wireless network operator registered postpaid phone churn at 1.39%-the lowest ever in its history, along with highest first-quarter postpaid phone net additions in nine years. The figure included $113 million of one-time charges related to contract termination with Ntelos Holding. This marked its fourth straight quarter in the positive. The company also had around $11 billion in liquidity, including $5 billion in cash.
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S stock has responded positively to the results’ announcement.
