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Sprint Posts Wider-Than-Expected Loss as $2 Billion in Cost Cuts Loom

The company also cut its full-year outlook, though it did at long last manage to add postpaid phone customers.

Asa Mathat for Re/code

Sprint on Tuesday reported a wider-than-expected quarterly loss, though it finally managed to stem defections of core postpaid phone customers.

The No. 4 wireless carrier posted a net loss of $585 million, or 15 cents per share, on revenue of $7.98 billion, for the quarter ended Sept. 30. The company had been expected to post a per-share loss of 9 cents, according to Zacks, while revenue also trailed some analysts’ expectations.

As for its customer base, Sprint said it added 237,000 postpaid phone customers, though BTIG analyst Walt Piecyk noted that 200,000 of those came from directly converting existing prepaid customers. Postpaid refers to the most lucrative type of phone customers, those who pay their bills at the end of each month and tend to spend more than those who pay ahead using Sprint-owned brands Boost and Virgin Mobile.

Sprint also said that adjusted earnings for its full fiscal year, which runs through next March, will be at the low end of its previous expectations. Shares fell in the wake of the report, changing hands recently at $4.42, down 43 cents or nearly 9 percent.

CEO Marcelo Claure, however, hailed the results as a milestone.

“This quarter marked an inflection point in our turnaround journey, as we achieved positive postpaid phone net additions for the first time in over two years,” Claure said. Counting all manner of customers, the company gained 1.1 million total customers, Sprint said.

All the other major carriers also reported customer gains, though. Most of the smartphone gains went to T-Mobile, while AT&T continued to add large numbers of cars and connected devices to its network. Verizon, meanwhile, added 1.3 million customers for the quarter.

Sprint’s report comes as the company looks to try to juggle competing priorities: Grow its network and customer base while cutting $2 billion in annual costs.

“This reduction will come from every area of the business with no stone unturned,” Claure said on a conference call with analysts, adding that there will be some one-time costs associated with making the operating expense reductions. Those costs could be around $1 billion to $1.2 billion, Sprint financial chief Tarek Robbiati said later on the call.

While some of the changes are designed to be largely invisible, such as shifting lease costs to a third party, Sprint is also making moves that could well impact morale, including layoffs. Sprint said it expects to finalize the new leasing operation in the next few weeks and said that with that move and the expected cost cuts it should have enough cash to fund its operations.

Claure has said his goal is for Sprint, widely seen as having the weakest network of the four major carriers, to have the No. 1 or No. 2 network by 2017.

Sprint has also said it will skip a key airwaves auction being held next year, saying it has enough spectrum for the time being, thanks to its acquisition of Clearwire a couple years ago.

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