How Sprint achieved 6% increase in revenue in Q4

Sprint retail presenceSprint posted operating revenue of $8.5 billion (+6 percent), net loss of $283 million ($554 million net loss), operating income of $470 million (+$462 million) and adjusted EBITDA of $2.7 billion (+24 percent) in the fourth quarter fiscal year 2016.

Sprint said its operating revenue was $33.3 billion (+4 percent), net loss of $1.2 billion ($2 billion net loss), operating income of $1.8 billion (+$1.5 billion) and adjusted EBITDA of nearly $10 billion (+22 percent) in fiscal year 2016.

Sprint Fiscal Year 2017 Outlook

# Adjusted EBITDA of $10.7 billion to $11.2 billion

# Operating income of $2 billion to $2.5 billion

# Cash capital expenditures, excluding devices leased through indirect channels, of $3.5 billion to $4 billion

“Sprint took a big step forward in the second year of our turnaround plan,” said Sprint CEO Marcelo Claure. “Net operating revenues returned to growth and cost reductions accelerated, leading to the highest operating income in a decade and a return to positive adjusted free cash flow.”

Customer additions fuel Sprint growth

Sprint added 930,000 postpaid phone customers in fiscal year 2016, more than twice as many as the prior year. The company also reported its highest postpaid phone gross additions in four years and improved its share of gross additions for the second year in a row.

Sprint added 42,000 postpaid phone customers and recorded its tenth consecutive quarter of improvement – competing with Verizon and AT&T that introduced new unlimited data plans. Verizon lost customers.

Sprint has added more postpaid phone customers than Verizon for five consecutive quarters and more than AT&T for 10 consecutive quarters.

The SoftBank company added 180,000 customers and returned to customer growth for the first time in two years.

Sprint said it added 187,000, including postpaid losses of 118,000, prepaid net additions of 180,000, and wholesale and affiliate additions of 125,000 in the fourth quarter. Sprint said it added 1.9 million, including postpaid additions of 811,000, prepaid losses of 1.1 million, and wholesale and affiliate net additions of 2.1 million in fiscal 2016.

Sprint said postpaid phone churn was 1.58 percent and postpaid churn was 1.75 percent in the fourth quarter. Sprint said postpaid phone churn of 1.48 percent was the lowest in company history and total postpaid churn was 1.62 percent in fiscal 2016.

How Sprint reduced cost?

Sprint delivered $2.1 billion of reductions in cost of service and selling, general and administrative expenses in fiscal year 2016, bringing the two-year total reduction to $3.4 billion.

Sprint executed its financing strategy of diversifying its funding sources, lowering its cost of capital, and reducing its future cash interest expenses.

Sprint replaced its $3.3 billion unsecured revolving bank credit facility with a new $6 billion secured credit facility, consisting of a $4 billion seven-year term loan and a $2 billion four-year revolving bank credit facility.

The company retired approximately $1.6 billion of debt maturities with higher interest payments in the quarter, including $1 billion of 9.125 percent senior notes, $300 million associated with its Network LeaseCo facility, and $250 million related to the early retirement of tranche 4 of its EDC facility.