Sprint posts its first quarterly profit in three years
- Author: Wendy Palmer Aug 01, 2017,
Aug 01, 2017, 22:51
Amid on-again, off-again merger and acquisition discussion regarding US carrier Sprint, the company on Tuesday morning released Q1 2017 financial reports indicating a return to profitability for the first time in three years.
On the M&A front, Sprint (s) has been reportedly in talks with competitor T-Mobile (tmus) as well as the two cable giants getting into wireless, Comcast (cmcsa) and Charter Communications (chtr). The new company would then attempt to purchase T-Mobile U.S. Inc., Bloomberg News reported Monday, citing sources close to negotiations.
Most importantly, Sprint was able to gain 88,000 new postpaid additions during the quarter that ended on June 30th, 2017, the eight consecutive quarter of additions for the carrier.
Sprint CEO Marcelo Claure said that the profit was "an important milestone" for the carrier on its way to transform its cost structure. Next quarter's results will be the real test - is not even a free Sprint service appealing to customers?
"We think an announcement will be coming in the near future", Claure said, adding that this would likely be a "vertical" or "horizontal" integration with one of the potential partners that Sprint is talking to. He also maintained Sprint can be sustainable as a standalone company, but he made it clear the carrier is eagerly pursuing a tie-up with a variety of players. Analysts had expected a loss of a penny a share on $8.11 billion in revenue. The company is having discussions with other companies, he said. Revenue totalled to $8.16 billion, compared to $8.01 billion in the previous year and analysts' expectations of $8.11 billion. Our skepticism about Sprint's deal-making has nothing to do with Sprint's intrinsic attractiveness; its subscriber base is inherently appealing to anyone wanting scale, and its spectrum trove of 2.5 GHz spectrum really does have incremental value.
About that rumor that Sprint had set aside talks with T-Mobile during a supposed two month exclusive period to negotiate with Comcast and Charter, Claure said the reports were "not necessarily factual". Sprint added 61,000 total customers for the quarter.
Shares of Sprint Corp. rose 82 cents, or 10 percent, to $8.80 in late morning trading.
On the company's post-earnings conference call, Claure said that while Sprint could sustain itself, the synergies that could come with a transaction were significantly better than remaining a standalone entity.