Sprint Corp., the third-largest U.S. wireless carrier, reported a narrower loss and better-than- predicted sales after the company shed fewer subscribers than analysts had projected.
Revenue rose to $9.14 billion, the Overland Park, Kansas- based Sprint said today in a statement. Analysts had estimated $8.99 billion on average, according to data compiled by Bloomberg. The company posted a net loss of $1.04 billion, or 26 cents a share, compared with a loss of $1.32 billion, or 44 cents, a year earlier.
Chief Executive Officer Dan Hesse is working to revive growth at the carrier following its acquisition by SoftBank Corp. in July for $21.6 billion. Sprint closed down its outdated Nextel network on June 30, losing some subscribers to other carriers in the process. Now it's counting on the financial backing of SoftBank to get competitive again, said Kevin Roe, an analyst with Roe Equity Research in Dorset, Vermont.
"The sky is not falling at Sprint," he said. "The Street is well aware of the network transition challenges."
Sprint shares climbed as much as 6.4 percent to $8.18 in early trading after the report was released. Concerns that Sprint has facing fiercer competition and mounting network costs had weighed on the company's stock, sending it down 28 percent this year through yesterday.
The company lost a total of 69,000 monthly subscribers last quarter. Analysts had predicted a drop of 371,000, according to the average of eight estimates compiled by Bloomberg.
Even as it helps Sprint revamp its network, Tokyo-based SoftBank has been eyeing an acquisition of T-Mobile US Inc. The Japanese company has held talks with U.S. regulators and with T- Mobile owner Deutsche Telekom AG about a deal, according to people familiar with the situation. SoftBank, run by billionaire Masayoshi Son, has struggled to persuade regulators that combining Sprint and T-Mobile would make a stronger competitor to AT&T Inc. and Verizon Wireless, people with knowledge of the discussions have said.
At the same time, T-Mobile has been ramping up competition in the wireless business. The Bellevue, Washington-based company introduced an installment plan for smartphones, abandoning the long-term contracts used by the industry. It also rolled out early upgrade options and cheap international roaming, helping it stand out in the market.
At Sprint, the average contract customer's phone bill was $64.11 last quarter, little changed from $64.28 in the previous three months. Including customers Sprint acquired in its purchase of U.S. Cellular Corp. assets last year, the average bill was $63.44. Analysts had projected $64.01, based on an average of nine estimates compiled by Bloomberg.
Sprint is spending about $16 billion over two years on network upgrades, playing catch-up with AT&T and Verizon in a network standard called long-term evolution, or LTE. LTE delivers fast Internet access, allowing users to stream video and download music. The company also introduced a program called Sprint Framily that lets friends and family share the same wireless plan.Copyright © 2014 Paddock Publications, Inc. All rights reserved.