Telecommunications giant Sprint Corp. (S), which recently entered into a merger agreement with rival T-Mobile (TMUS), Wednesday said its first-quarter earnings declined after a slump in demand for services dragged revenues. The results, meanwhile, exceeded Wall Street estimates.
The company posted net income of $176 million or $0.04 per share for the first quarter, continuing the recovery that started last year and surpassing analysts’ forecast. In the same quarter last year, earnings were $206 million or $0.05 per share.
Net revenues dropped modestly to $8.1 billion during the three-month period, hurt mainly by a marked fall in service revenues. That was partially offset by a 35% increase in equipment rental revenues to $1.2 billion.
Postpaid phone net additions were 87,000 in the first quarter, broadly in line with the year-ago period, while prepaid phone net additions plunged to 3,000. Prepaid churn was the lowest in more than three years.
“By balancing growth and profitability, we were able to grow wireless service revenue sequentially, continue to add retail phone customers, generate net income for the third consecutive quarter, and improve the network,” said Sprint CEO Michel Combes.
Postpaid phone net additions were broadly in line with the year-ago period, while churn was the lowest in more than three years
For fiscal 2018, the management expects adjusted EBITDA in the range of $12.0 billion to $12.5 billion, which is slightly above the previous estimate. Full-year cash capital expenditures, excluding leased devices, are estimated to be between $5 billion and $6 billion.
Of late, Sprint has been focused on its initiative to deliver 5G technology in major cities across the country. The first mobile 5G network is expected to be launched in the first half of 2019.
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Among competitors, AT&T (T) and Verizon (VZ) last week reported better-than-expected earnings for their most recent quarter. T-Mobile US (TMUS) is scheduled to report second-quarter results today after the market closes.
Shares of Sprint lost 38% over the past twelve months. The stock, which closed the last trading session lower, recovered in the premarket trading following the earnings announcement.