Sprint and T-Mobile Report Banner Quarters
T-Mobile reported adding more than 1 million net branded postpaid customers in the first three months of 2018 as its latest quarterly results largely eclipsed Wall Street expectations.
The carrier said that total included 617,000 net postpaid phone additions, and officials reported branded postpaid phone churn of 1.07 percent.
Wall Street forecasters had expected 623,000 net phone additions and 819,000 added net postpaid connections overall, according to a note from Wells Fargo, while postpaid phone churn came in below the firm’s forecast of 1.16 percent.
Prepaid T-Mobile customers, meanwhile, increased by a net of 199,000, also ahead of Wall Street expectations. Along with 229,000 net added wholesale customers, the carrier touted net connections that increased by more than 1.4 million overall.
The results were reported two days after T-Mobile and Sprint announced a long-sought agreement to merge into what would be the nation’s No. 2 wireless carrier.
“2017 was a transformational year for our network and our distribution footprint and we’re off to a running start in 2018,” CEO John Legere said in the company’s earnings call, according to a transcript.
The carrier reported $10.5 billion in total revenues for the quarter — including $7.8 billion in service revenues and $2.4 billion in equipment revenues — and $3 billion in adjusted earnings. The revenue and earnings totals each beat the Wall Street forecasts of $10.3 billion and $2.9 billion, respectively.
The first quarter report also noted that T-Mobile has already deployed its 600 MHz spectrum holdings in 823 communities across 31 states, and company officials heightened the forecast range for postpaid net customer additions and adjusted earnings for the full calendar year.
“In a quarter in which customer volumes were light, [T-Mobile] still achieved impressive postpaid net phone adds in part by delivering record-low postpaid phone churn,” Wells Fargo analysts wrote. Sprint reported 39,000 postpaid net additions in its latest fiscal quarter and 1.78 percent postpaid churn as its results exceeded analysts’ expectations.
The carrier also announced a leadership shakeup Wednesday, three days after it proposed a $26 billion merger with larger U.S. rival T-Mobile, as President and CFO Michel Combes will take over as CEO later this month.
CEO Marcelo Claure will continue as Sprint executive chairman as well as take a position as COO at Japanese tech giant SoftBank Group, Sprint’s controlling shareholder.
“We delivered record profitability metrics in fiscal 2017 while simultaneously delivering the highest retail phone net adds in five years,” Combes said during the company’s earnings call, according to a transcript. “This reinforces our strategy of balancing both growth and profitability through our relentless focus on cost reduction, operating efficiency and compelling value propositions.”
Sprint reported adding 55,000 net postpaid phones during the first three months of the year and said postpaid phone churn was 1.68 percent.
The phone churn rate matched projections from Wells Fargo analysts, but the firm noted Wall Street had expected Sprint to drop a net 55,000 handsets and overall postpaid connections. Sprint tallied an addition of 170,000 net prepaid connections in the quarter.
The carrier also reported $8.1 billion in quarterly revenue and $2.8 billion in adjusted earnings, which edged Wall Street estimates as well.
Sprint officials said the report, which wrapped up its 2017 fiscal year, reflected progress in its multi-year cost-cutting efforts. The company said it reduced service, selling, general and administrative spending by $1.1 billion over the full fiscal year, excluding about $100 million in non-recurring charges, such as those related to hurricane damage.
“By executing our turnaround, we have positioned Sprint for strategic opportunities which led to our proposed merger with T-M