Sprint CEO Marcelo Claure has revealed how the company achieved reductions in cost of services and SG&A expenses during the second quarter of fiscal 2017.
Sprint delivered nearly $400 million of combined reductions in cost of services and SG&A expenses in the quarter, bringing the year-to-date total reduction to more than $750 million. Sprint made changes to the device insurance program to achieve cost reductions. Sprint said lower network and customer care expenses also contributed to the reduction.
Sprint in Q2
# Service revenue of $5,967 million
# Adjusted EBITDA of $2.7 billion
# Operating income of $601 million
# Net loss of $48 million
# Capex of $682 million
Sprint CFO Tarek A. Robbiati said cost of services for the second quarter of $1.7 billion was down 19 percent.
Sprint expects to achieve $1.3 billion to $1.5 billion of reductions in cost of services and SG&A expenses in fiscal year 2017.
Sprint said the cost reduction program has contributed to improved profitability, as the company has now reported seven consecutive quarters of operating income and $158 million of net income year-to-date.
Sprint’s operating income and net loss were negatively impacted by $34 million of hurricane-related charges. Sprint said future quarters may be impacted by additional charges.
Sprint’s selling, general, and administrative expenses were $2 billion. Cost of products of $1.4 billion fell by 17 percent, mostly driven by a lower mix of installment billing sales and the elimination of lease payments associated with the first sale-leaseback transaction with Mobile Leasing Solutions.
“We remain focused on our cost transformation as we expect roughly $1.3 to $1.5 billion in net cost reductions year-over-year in fiscal 2017, after reinvestments into growth platforms for the business including retail distribution, network densification, digitalization of sales and care, and prepaid growth initiatives,” Sprint CFO Tarek A. Robbiati said.
Sprint Network
Sprint’s capital expenditures (Capex) were $682 million in the quarter compared to $470 million in the year-ago period — driven by the ramp up of network improvement initiatives and densification program.
Sprint is started densifying and optimizing its network. The company has already deployed small cell solutions, including the Sprint Magic Box. Sprint Magic Box improves data coverage and increases download and upload speeds on average by 200 percent.
Sprint will add Massive MIMO to the Sprint toolbox with field testing underway and deployment slated for next year. Massive MIMO is expected to bring more capacity and performance to the Sprint network – up to 10 times more capacity than current LTE networks.
Sprint can bring Massive MIMO to high-band TDD-LTE networks by simply exchanging antennas on cell sites.
Sprint is also preparing our network for the growing IoT ecosystem as it completed deployment of LTE Cat 1 technology across our nationwide network.
Sprint has tied up with SoftBank, Qualcomm, China Mobile, and others towards developing the 5G NR standards to make 2.5GHz a key band in global 5G deployments.
