Sprint continued to gain momentum in its first fiscal quarter of 2016, recording 173,000 postpaid phone net additions and record-low postpaid phone churn of 1.39 percent.
As of 11:50 a.m. ET, Sprint stocks were up more than 25 percent on the news.
The net addition figure was up from just 22,000 postpaid adds in the previous quarter and a loss of 12,000 postpaid handsets the year before. Churn was down from 1.49 percent the year prior and 1.56 percent in the March quarters.
Sprint also said it became postpaid net port positive against all three national carriers for the first time in more than five years during the quarter.
Sprint said 69 percent of postpaid device sales for the quarter were financed, including 44 percent on the carrier’s lease plan. Approximately 64 percent of Sprint’s postpaid phone base is now on unsubsidized rate plans, the carrier said. Sprint’s average billing per user – which factors in both equipment and service – was up 3 percent year-over-year to $72.71, though service costs alone dipped from $62.79 a year ago to $59.20 in the most recent quarter.
Rounding out the good news was Sprint’s achievement of $550 million in year-over-year cost reductions through cost of services and selling, general and administrative (SG&A) expenses.
But the cost of attracting new customers with plan discounts was clear.
Sprint posted a net loss of $302 million on net operating revenue of $8.01 billion, up from a loss of just $20 million on revenue of $8.03 billion a year ago. The carrier also continued to lose prepaid subscribers, posting a net loss of 331,000 prepaid handsets. That figure was up sequentially from 264,000 but down from 366,000 year over year.
During Monday’s earnings call, Sprint CFO Tarek Robbiati said the company is “never content to rest on our laurels” and will “continue to seek opportunities to improve our cost base.”
The company is on track to achieve its goal of sustainably reducing run rate expenses by $2 billion or more, Robbiati said.
Sprint executives on Monday also talked network improvements, which they credited for the carrier’s continually improving churn rate.
According to Robbiati, Sprint’s 2.5 GHz spectrum is “very much central to everything we intend to do” and now carries more of Sprint’s LTE traffic than any of the carrier’s other spectrum bands.
Despite concerns about Sprint’s skimpy $3 billion capital expenditure allowance, Robbiati said the carrier plans to continue investing in network improvements as site permits come through, as well as via carrier aggregation and new structures Sprint calls “small sites.” Robbiati said addition investments might be made if churn increases, but said right now the carrier feels “very good” about that measure.
Robbiati said Sprint’s small sites are built around macro cells and cost about 20 percent of what a macro tower does.
Robbiati said Sprint has now launched two-carrier aggregation in 237 markets across the country, including 33 in the last quarter, and is “progressing very quickly” to three-carrier aggregation.
Sprint CTO John Saw said the carrier currently offers five devices capable of three-carrier aggregation and will soon be announcing three more. Approximately 74 percent of postpaid handset sales in the quarter were carrier aggregation capable, Saw said.
According to Saw, Sprint has seen two-carrier aggregation deliver speeds between 50 mbps and 120 mbps to its customers, and expects three-carrier aggregation will boost those figures to peak speeds of 200 mbps. Saw said carrier aggregation will also help with capacity, which will also improve customer experience on the network.
In a Monday research note, Wells Fargo Senior Analyst Jennifer Fritzsche said around 35 percent of Sprint’s base now have a carrier aggregation capable handset.
