Sprint Stock Soars 27 Percent after Showing Progress on Turnaround Efforts

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The stock price of Sprint Corporation (NYSE: S) surged more than 27% to $5.90 per share after reporting its first quarter financial results that showed progress on its turnaround efforts.

The struggling wireless telecommunications provider reported its sixth consecutive quarter of subscriber gains on Monday.

For the first-quarter, Sprint added 173,000 postpaid phone customers, the highest net additions in nine years. During the same period a year ago, the company posted 12,000 postpaid phone net losses.

Sprint Corporation

Sprint posts the lowest postpaid phone churn

Its postpaid phone churn improved 10 basis points to 1.39%, the lowest in the history of the company.

In a statement, Sprint CEO Marcelo Claure, said, “We had another quarter of solid progress in our turnaround with the highest first quarter postpaid phone net additions in nine years, the lowest postpaid phone churn in company history, and finally being postpaid net port positive against all three national carriers after five years.”

“We also grew wireless net operating revenue year-over-year while aggressively reducing the cash operating expenses of the business and our network is performing better than ever,” he added.

According to Sprint, its total net additions for the quarter was 277,000 including 180,000 postpaid net additions and 331,000 prepaid net losses and 528,000 wholesale and affiliate net additions. Its total postpaid churn was 1.56%.

Quarterly financial results

Sprint reported a net loss of $302 million or $0.08 per share for the first quarter, which included $113 million of non-recurring contract termination charges primarily related to the termination of pre-existing wholesale arrangement with Ntelos Holding Corp.

Its operating income was $361 million and adjusted EBITDA was $2.5 billion, up by 18% from the previous year.  The company’s adjusted free cash flow was $466 million.

Sprint said its liquidity position improved to nearly $11 billion by the end of the quarter including $5.1 billion of cash, cash equivalents, and short-term investments. The company also has $1.1 billion of availability under its vendor financing agreements, which it can use to purchase 2.5GHz network equipment.

Business outlook

For the full fiscal 2016, Sprint expected to achieve an operating income of around 41 billion to $1.5 billion and adjusted EBITDA of around $9.5 billion to $10 billion

The company also estimated its cash capital expenditures to be around $3 billion excluding devices leased through indirect channels. Sprint expected its free cash flow to be break even.

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