Advertisement

Sprint shares were on a massive 12 percent upswing Tuesday morning after the carrier announced its half-off promotion produced 501,000 net additions and record-low churn in the three months ending December 2015.

Sprint CEO Marcelo Claure said the quarter’s churn rate of 1.62 percent was the best ever postpaid churn in the third fiscal quarter in the company’s history and the biggest year-over-year churn improvement in 12 years.

Postpaid net additions were up 471,000 from the same quarter a year prior, and total net additions for the quarter were 491,000.

During the Tuesday earnings call, the company also said it was raising its fiscal year 2015 adjusted Earnings before interest, taxes, depreciation, and amortization (EBITDA) outlook to $7.7 billion to $8 billion from a previous forecast of $6.8 billion to $7.1 billion. Sprint CFO Tarek Robbiati said the change was due to the movement of the company’s transformation costs from fiscal year 2015 to fiscal year 2016.

The news seemed to help allay some fears on Wall Street after reports of job cuts and network equipment relocation sent Sprint stocks tumbling 14 percent on Monday afternoon.

Despite the reports, Claure said on Tuesday nothing in Sprint’s plan had changed from what was previously stated.

In what he termed a “progressive build,” Claure said the carrier is looking to continue its small cell deployment using a “lowest cost structure” strategy that examines options like towers, monopoles and rooftops to determine the most cost-efficient way to expand. Claure said the deployments will not be a rip and replace but rather a progressive expansion of Sprint’s network.

Sprint CTO John Saw said Sprint is planning to both extend its LTE footbring and build cells in high roaming areas to cut costs. The carrier is also testing the potential use of its 2.5 GHz spectrum for backhaul to save on trenching fiber to the new sites, he said.

“We’re going to be very opportunistic… to deliver similar or better performance at a lower cost,” Saw said.

Saw attempted to put to bed rumors that the company would be parting ways with its tower company partners, saying that the company has long leases of 5-7 years that it has no plans to exit. Saw said tower partnerships are “integral” to Sprint’s network and said the carrier expects to continue its “strategic relationship” with its tower partners for “many years to come.”

Robbiati said the company will also remain focused on cutting costs, noting that nearly $800 million in savings have already been achieved and “hundreds of initiatives” are on the way.

According to Robbiati, the company is on track to achieve $2 billion or more in run rate operating expenses through cuts of around $200 million from the cost of products, $400 million to $600 million from the cost of services and $1.2 billion to $1.4 billion from selling, general and administrative expenses (SG&A).

Robbiati said cuts in SG&A expenses will be made across sales, marketing, care, IT and general and administrative expenses. Robbiati said the company has “left no stone unturned” in its attempts to achieve a better channel mix and become more efficient in its immediate spend.

However, Sprint still posted losses of $836 million on operating revenue of $8.1 billion, down from a net loss of $2.4 billion for the same period last year.

Robbiati declined to offer a specific timeline for when the company would achieve free positive cash flow.

According to Sprint, 76 percent of postpaid phone sales and 21 percent of its postpaid phone base were using LTE plus devices in the third fiscal quarter. Customer connections were on LTE 94 percent of the time, Claure said, noting that the metric was an “important indicator of customer experience.”

“Our customers are now enjoying the breadth and capacity that our network team has worked so hard to deliver,” Claure said.

Despite Sprint’s strong performance in the quarter, the carrier has a long haul to catch up with the likes of a competitor like Verizon, which reported a churn rate of 0.96 percent and 1.2 million net adds in its fourth quarter earnings last week.

Advertisement
Advertisement