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Sprint Swings to Profit as Subscriber Losses Slow

Wed, 07/30/2014 - 10:33am
Ben Munson

Sprint opened its new fiscal year with a rare quarterly profit. The carrier called a $23 million net income and $519 million operating income the highest in seven years.

The black numbers came on fiscal first-quarter earnings per share of $0.01 and revenue of $8.78 billion, both of which exceeded analyst estimates.

Losses to the Sprint Platform also bested forecasts. Sprint reported a net loss of 220,000 subscribers—an improvement on the 383,000 lost in the previous quarter and 520,000 in the year-ago quarter. A Jeffries analyst predicted quarterly subscriber losses of 350,000. Sprint’s postpaid net losses of 181,000 were attributed to higher churn. 

Prepaid handset losses were offset by 535,000 net prepaid tablet adds though the carrier warned of the much lower revenue associated with tablets.

“Our complete network replacement impacted the network experience, so we lost customers last quarter,” Sprint CEO Dan Hesse said in a statement.

Hesse said the recently launched the Sprint Satisfaction Guarantee, similar to T-Mobile’s Test Drive program, is aimed at boosting consumer confidence by offering no-risk access to its Framily plans.

But the large-scale disruption of Sprint’s network overhaul could be nearing a stage where the efforts begin to bare fruit. Sprint said it’s nearly done with upgrading its core 3G and voice network and that its LTE network now covers approximately 254 million people.

With Sprint’s quarterly numbers in the book—the first since realigning its fiscal year with SoftBank’s—the carrier may now be returning its focus to a rumored merger bid with T-Mobile. According to Reuters, Sprint’s play for T-Mobile, valuing the smaller carrier at $32 billion, might not come until September. Previous reports had anticipated a deal could be made public by July or August.

Sprint stock was up more than one percent as of 9:25 a.m. CT.

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