) reported third quarter 2013 net income of $383 million against
loss of $767 million in the year-ago quarter. The improvement
came on the back of $1.4 billion gains related to investments in
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Quarterly operating revenues decreased 1% year over year to
$8,681 million and missed the Zacks Consensus Estimate of $8,792
Adjusted EBITDA of $1.34 billion increased 5% year over year
buoyed by service revenues, gains from the shut down of the
Nextel platform and lower net subsidy expenses.
operating revenues was $8,017 million in the quarter, down
marginally from $8,042 million in the year-ago quarter. The
company recorded service revenues of $7,307 million in comparison
to $7,292 million in the year-ago quarter thanks to the
introduction of new pricing plans such as Unlimited, My Way and
My All-In plans that include unlimited talk, text and data while
on the Sprint network. In addition, the company has also gained
from its smartphone upgrade plan, Sprint One Up, which offers
unlimited talk, text and data alongside smartphone upgrade in
every 12 months.
Sprint lost approximately 313,000 million subscribers in the
reported quarter, representing a net loss of 507 million in
retail subscribers and gain of 194,000 in wholesale and affiliate
The Sprint platform lost 360,000 post-paid customers. With regard
to prepaid subscription, Sprint added 84,000 users.
At the end of the third quarter, Sprint had approximately 53.252
million customers (including 30.1 million post-paid, 15.3 million
prepaid and 7.9 million wholesale and affiliate) compared with
52.857 million in the year-ago quarter.
Wireless post-paid average revenue per unit (ARPU) increased to
$64.28 from $63.21 in the year-ago quarter backed by higher
monthly recurring revenues. Prepaid ARPU decreased to $25.33 from
$26.19 in the year-ago quarter.
Sprint platform post-paid churn (customer switch) rate was 1.99%
in the reported quarter, compared with 1.88% in the year-ago
quarter. Sprint platform prepaid churn deteriorated to 3.57% from
2.93% in the prior-year quarter.
During the third quarter, Sprint sold nearly 1.4 million
) iPhones and about 40% of the iPhone customers were new to
revenues dropped to $875 million from $939 million in the
year-ago quarter owing to poor performances by voice, Internet
and cable units.
At the end of third quarter, Sprint had approximately $6,058
million in cash and cash equivalents compared with $6,351 million
in 2012. Net debt increased to $23 billion from $16.1 billion at
the end of 2012. The company incurred capital expenditure of
$1,841 million in the third quarter compared with $1,489 million
in the corresponding year-ago quarter.
For full-year 2013, Sprint expects adjusted EBITDA between $5.1
billion and $5.3 billion assuming the dilutive impact of SoftBank
and Clearwire transactions. Capital expenditure is expected at $8
Sprint currently has a Zacks Rank #3 (Hold). We believe Sprint's
near future remains challenged by the dilutive impact of the
Network Vision program and subscriber headwinds due to
re-certification of the Lifeline service. However, Sprint's
efforts to taper its losses supported by a strong wireless
business with reducing churn, improving ARPU, increasing
penetration of handsets, service offerings and spectrum
acquisitions from Clearwire and
United States Cellular Corporation
) transactions are encouraging. Nevertheless, increased
competition from carriers like
Verizon Communications Inc.
), heavy investments, and continued wireline margin erosion keep
us cautious on the stock.