Telecom giant Sprint Corp. (NYSE: S) reported third-quarter fiscal 2015 earnings before markets opened Tuesday. The phone company posted a diluted per share net loss of $0.21, compared with a net loss a year ago of $0.60. Quarterly revenues totaled $8.11 billion, compared with revenues of $8.97 billion in the third quarter of 2014.
The company’s operating loss totaled $197 million and adjusted EBITDA totaled $1.9 billion, an increase of nearly 82%, compared with the third quarter of 2014. Sprint attributed the EBITDA growth to expense reductions due to lower cost of product expenses related to device leasing options and $500 million of lower selling, general and administrative expenses.
Sprint added 501,000 net postpaid (contract) subscribers in the third quarter, up from a gain of 30,000 in the prior year quarter. Sprint’s prepaid net losses totaled 491,000, compared with net additions of 410,000 a year ago.
The company claims a total of 58.36 million connections, up from 54.89 million at the same time last year. Average revenue per user (ARPU) on the Sprint platform fell by about $6.40 per month for postpaid subscribers and rose by about $0.32 per prepaid customer, compared with the third quarter of 2014.
CEO Marcelo Claure said:
It’s clear from our quarterly results that we are making great progress on achieving our goals. Revenue has stabilized, costs are coming out faster than expected, postpaid phone net additions were the highest in three years, postpaid churn was the lowest-ever for a third quarter, and the network is performing at best-ever levels.
The press release also outlines the company’s cost-savings goals:
Sprint remains on track to exceed its cost reduction target for fiscal 2015 and has realized a nearly $800 million reduction in cost of service and selling, general, and administrative expenses year-to-date, including $500 million in the third quarter. Sprint continues to progress toward a sustainable reduction of $2 billion or more of run rate operating expenses exiting fiscal 2016 and expects approximately $1 billion of transformation program costs, which are expected to be split relatively evenly between operating expenses and capital expenditures, to be incurred across fiscal 2015 and 2016 to achieve that run rate benefit.
On Monday, Bloomberg reported that Sprint is firing 2,500 employees and closing several call centers as part of its plan to save money. The company did not confirm the number but did confirm that it is “significantly taking costs out of the business so the transformation of the company will be sustainable for the long-term.”
The company raised its guidance for adjusted EBITDA from a range of $6.8 billion to $7.1 billion to a new range of $7.7 billion to $8 billion. Full fiscal year 2015 operating income guidance has been raised from a prior range calling for a net loss of $50 million to $250 million to a new range for positive earnings of $100 million to $300 million.
Sprint’s stock traded up more than 18% in Tuesday’s premarket, at $2.99 in a 52-week range of $2.18 to $5.45. Shares closed at $4.85 on Monday. The consensus price target was $7.28 before the earnings announcement.