Sprint Q2 Loss Narrows, Revenues Up; Lifts 2016 Operating Income Outlook

(RTTNews) - Sprint Corp. (S) reported a net loss for the second-quarter that narrowed from the prior year. It raised its 2016 guidance for operating income partially due to the net benefit of special items in the quarter.

"We took another step forward in our plan toward sustainable profitability and cash generation with this quarter's results," said Sprint CEO Marcelo Claure. "The top line is now growing, we continue to take costs out of the business, and we are successfully raising money at materially lower rates to reduce our future cash interest expenses."

The company raised its 2016 guidance for operating income to a range of $1.2 billion to $1.7 billion, from its previous expectation of $1 billion to $1.5 billion.

The company now expects 2016 cash capital expenditures, excluding devices leased through indirect channels, to be less than $3 billion, as the company has better visibility into the timing of payments associated with its network densification plan.

The company continues to expect Adjusted EBITDA of $9.5 billion to $10 billion and Adjusted free cash flow around break-even for 2016.

Net loss for the second quarter narrowed to $142 million or $0.04 per share, from $585 million, or $0.15 per share, in the year-ago period.

Operating income of $622 million in the quarter compared to an operating loss of $2 million in the year-ago period, an improvement of $624 million. The latest-quarter included a non-cash pre-tax gain of $354 million related to spectrum swaps with other carriers that was partially offset by $103 million of litigation and other contingency expense.

Total net operating revenues grew to $8.25 billion from $7.98 billion in the prior year.

Sprint said its focus on delivering the best value proposition in wireless resulted in its fifth consecutive quarter of positive postpaid phone net additions with 347,000 in the quarter, an improvement of 285,000 compared to the year-ago period. The year-over-year improvement was driven by both better acquisition and retention, as postpaid phone gross additions were up nearly 20 percent year-over-year and postpaid phone churn of 1.37 percent improved 12 basis points to reach the lowest level in company history. Postpaid phone churn has improved year-over-year for seven consecutive quarters.

Total net additions were 740,000 in the quarter, including postpaid net additions of 344,000, prepaid net losses of 427,000, and wholesale and affiliate net additions of 823,000.

Total postpaid churn of 1.52 percent in the quarter improved by two basis points year-over-year.