OVERLAND PARK, Kan.,
Jan. 27, 2020 /PRNewswire/ --
- Wireless service revenue of $5.2
billion
-
- Postpaid wireless service revenue of $4.2 billion was stable sequentially and
year-over-year
- Postpaid average revenue per account (ARPA) of $124.80 and postpaid phone average revenue per
user (ARPU) of $50.37 were stable
sequentially and year-over-year
- Net loss of $120 million,
operating income of $66 million, and
adjusted EBITDA* of $2.5
billion
- Postpaid net additions of 494,000
-
- 10th consecutive quarter of net
additions
- Data device net additions of 609,000 were partially offset
by phone net losses of 115,000
- Average postpaid accounts of 11.3 million grew sequentially
and year-over-year for the third consecutive quarter
- Digital capabilities driving higher sales, better customer
experience, and cost efficiencies
-
- Postpaid gross additions in digital channels increased 80
percent year-over-year
- More than 25 percent of all targeted customer care web chats
are performed by virtual agents using artificial
intelligence
- Continued execution of Next-Gen Network plan
-
- Second fastest network and most improved operator based on
national average download speeds
- True Mobile 5G coverage expanded to 20 million
people
Sprint Corporation (NYSE: S) today reported results
for the fiscal year 2019 third quarter, including stability in
postpaid wireless service revenue and continued growth in postpaid
net additions. The company also reported a net loss of $120 million, operating income of $66 million, and adjusted EBITDA* of $2.5 billion.
"I continue to be impressed by the commitment of Sprint
employees to deliver results during this period of uncertainty,"
said Sprint CEO Michel Combes. "As
we await a decision in the state attorneys general lawsuit, I
continue to believe the merger with T-Mobile is the best way to
deliver the benefits of competition to American consumers."
Stable Wireless Service Revenue and Cost
Optimization
Postpaid wireless service revenue of
$4.2 billion remained stable
sequentially and year-over-year as Sprint continued to focus on
promoting its feature-rich Unlimited Plus and Unlimited Premium
rate plans, selling additional data devices, and being more
selective in its acquisition of postpaid phone customers. Postpaid
net additions of 494,000 and average postpaid accounts of 11.3
million improved sequentially and year-over-year, while postpaid
ARPA of $124.80 remained stable.
Total wireless service revenue of $5.2
billion was negatively impacted by the continued
amortization of prepaid contract balances as a result of adopting
the new revenue standard last year, while the year-ago period
included Lifeline revenue related to federal and state government
subsidies claimed as a result of an inadvertent coding error.
Adjusting for these impacts, total wireless service revenue was
stable year-over-year and sequentially.
The company continued its focus on cost optimization during the
quarter by driving year-over-year gross reductions in cost of
services and selling, general and administrative expenses, with
most of the reductions coming from network optimization. These
reductions have been offset by incremental costs associated with
network coverage and capacity improvements, along with other
customer experience initiatives.
Digital Capabilities Driving Higher Sales, Better Customer
Experience, and Cost Efficiencies
Sprint continued to
enhance its digital capabilities and transform the way it engages
with customers.
- Postpaid gross additions in digital channels increased 80
percent year-over-year.
- Postpaid upgrades in digital channels increased more than 40
percent year-over-year.
- More than 25 percent of all targeted customer care web chats
are performed by virtual agents using artificial intelligence.
- Web conversions improved and orders from digital media more
than doubled year-over-year.
These digital initiatives have contributed to more efficient
acquisition of new customers, along with lower customer care
costs.
Network Improves and True Mobile 5G Coverage Expands
to 20 Million People
Sprint made continued progress on
executing its focused Next-Gen Network plan.
- Sprint has 2.5 GHz spectrum substantially deployed on its
existing macro sites.
- The company has continued the rollout of Massive MIMO, a
breakthrough technology that improves network capacity, enhances
LTE performance, and allows for simultaneous use of spectrum for
LTE and 5G. The company has thousands of Massive MIMO sites on-air
across the country.
- Sprint has approximately 37,000 outdoor small cells deployed
including both mini macros and strand mounts.
These deployments have driven performance improvements and
increased capacity in Sprint's network, as seen in Ookla Speedtest
Intelligence data which shows Sprint having the second fastest
network[1] and being the most improved operator in calendar 2019
with a 45 percent year-over-year increase in its national average
download speeds.[2] Additionally, the company is focused on
improving the end-to-end network quality for its customers.
Sprint expanded its True Mobile 5G network coverage to
approximately 20 million people within nine metropolitan areas –
Atlanta, Chicago, Dallas-Fort
Worth, Houston,
Kansas City, Los Angeles, New
York City, Phoenix and
Washington, D.C. In these areas,
customers with 5G devices are experiencing dramatically faster
speeds with Sprint's average 5G download speed of 215 Mbps more
than 5X faster than Sprint LTE.[3]
Additional Information
- Additional information about results, including a message from
management, is available on the Investor Relations website at
www.sprint.com/investors.
1 Based on analysis by Ookla® of Speedtest
Intelligence® data average download speeds from Q4 2019 for All
Mobile Results. Ookla® trademarks used under license and reprinted
with permission.
2 Based on analysis by Ookla® of Speedtest
Intelligence® data average download speeds from December 2018 to December
2019 for All Mobile Results. Ookla® trademarks used under
license and reprinted with permission.
3 Based on analysis by Ookla® of Speedtest
Intelligence® data average download speeds for December 2019 of 4G (LTE) and 5G Beta (NR)
results. Ookla® trademarks used under license and reprinted with
permission.
Wireless Operating
Statistics (Unaudited)
|
|
|
|
|
|
|
|
Quarter To
Date
|
|
Year To
Date
|
|
12/31/19
|
9/30/19
|
12/31/18
|
|
12/31/19
|
12/31/18
|
Net additions
(losses) (in thousands)
|
|
|
|
|
|
|
Postpaid(a)
|
494
|
273
|
309
|
|
901
|
541
|
Postpaid
phone
|
(115)
|
(91)
|
(26)
|
|
(334)
|
27
|
Prepaid(a)
|
(174)
|
(207)
|
(173)
|
|
(550)
|
(184)
|
Wholesale and
affiliate
|
(71)
|
(462)
|
(88)
|
|
(673)
|
(272)
|
Total wireless net
additions (losses)
|
249
|
(396)
|
48
|
|
(322)
|
85
|
|
|
|
|
|
|
|
End of period
connections (in thousands)
|
|
|
|
|
|
|
Postpaid(a)
(b)(c)(d)
|
33,842
|
33,348
|
32,605
|
|
33,842
|
32,605
|
Postpaid
phone(b) (c)
|
26,264
|
26,379
|
26,787
|
|
26,264
|
26,787
|
Prepaid(a) (b)
(c)
|
8,266
|
8,440
|
8,846
|
|
8,266
|
8,846
|
Wholesale and
affiliate (c) (d) (e)
|
12,057
|
12,128
|
13,044
|
|
12,057
|
13,044
|
Total end of
period connections
|
54,165
|
53,916
|
54,495
|
|
54,165
|
54,495
|
|
|
|
|
|
|
|
Churn
|
|
|
|
|
|
|
Postpaid
|
1.98%
|
1.87%
|
1.85%
|
|
1.87%
|
1.75%
|
Postpaid
phone
|
2.06%
|
1.91%
|
1.84%
|
|
1.91%
|
1.71%
|
Prepaid
|
4.92%
|
4.94%
|
4.83%
|
|
4.70%
|
4.58%
|
|
|
|
|
|
|
|
Supplemental data
- connected devices
|
|
|
|
|
|
|
End of period
connections (in thousands)
|
|
|
|
|
|
|
Retail
postpaid
|
4,050
|
3,718
|
2,821
|
|
4,050
|
2,821
|
Wholesale and
affiliate
|
9,419
|
9,585
|
10,563
|
|
9,419
|
10,563
|
Total
|
13,469
|
13,303
|
13,384
|
|
13,469
|
13,384
|
|
|
|
|
|
|
|
ARPU(f)
|
|
|
|
|
|
|
Postpaid
|
$
42.02
|
$
42.30
|
$
43.64
|
|
$
42.29
|
$
43.73
|
Postpaid
phone
|
$
50.37
|
$
50.10
|
$
50.01
|
|
$
50.11
|
$
49.91
|
Prepaid
|
$
29.63
|
$
30.97
|
$
34.53
|
|
$
30.93
|
$
35.40
|
|
|
|
|
|
|
|
ARPA(g)
|
|
|
|
|
|
|
Average postpaid
accounts (in thousands)
|
11,295
|
11,265
|
11,196
|
|
11,256
|
11,193
|
Postpaid
ARPA
|
$
124.80
|
$
124.81
|
$
126.14
|
|
$
124.83
|
$
125.87
|
|
|
|
|
|
|
|
(a)During
the three and nine-month periods ended December 31, 2019, net
subscriber additions under the non-Sprint branded postpaid plan
offering were 108,000 and 331,000, respectively, and are included
in total retail postpaid subscribers above. As of December 31,
2019, end of period subscribers under the non-Sprint branded
postpaid plan offering were 885,000 and are included in total
retail postpaid subscribers above.
|
(b)During
the three-month period ended June 30, 2018, we ceased selling
devices in our installment billing program under one of our brands
and as a result, 45,000 subscribers were migrated back to prepaid
from postpaid.
|
(c)
As a result of our affiliate agreement with Shentel, certain
subscribers have been transferred from postpaid and prepaid to
affiliates. During the three-month period ended June 30, 2018,
10,000 and 4,000 subscribers were transferred from postpaid and
prepaid, respectively, to affiliates.
|
(d)
During the three-month period ended June 30, 2019, one of our
postpaid customers purchased a wholesale MVNO and as a result,
167,000 subscribers were transferred from the wholesale to postpaid
subscriber base.
|
(e)
On April 1, 2018, approximately 115,000 wholesale subscribers were
removed from the subscriber base with no impact to revenue.During
the three-month period ended December 31, 2018, an additional
100,000 wholesale subscribers were removed from the subscriber base
with no impact to revenue.
|
(f)
ARPU is calculated by dividing service revenue by the sum of the
monthly average number of connections in the applicable service
category. Changes in average monthly service revenue reflect
connections for either the postpaid or prepaid service category who
change rate plans, the level of voice and data usage, the amount of
service credits which are offered to connections, plus the net
effect of average monthly revenue generated by new connections and
deactivating connections. Postpaid phone ARPU represents
revenues related to our postpaid phone connections.
|
(g)
ARPA is calculated by dividing postpaid service revenue by the sum
of the monthly average number of retail postpaid
accounts.
|
Wireless Device
Financing Summary (Unaudited)
|
|
|
|
|
|
|
(Millions, except
sales, connections, and leased devices in property, plant and
equipment)
|
|
|
|
|
|
|
|
Quarter To
Date
|
|
Year To
Date
|
|
12/31/19
|
9/30/19
|
12/31/18
|
|
12/31/19
|
12/31/18
|
|
|
|
|
|
|
|
Postpaid
activations (in thousands)
|
4,773
|
3,983
|
4,462
|
|
12,231
|
11,707
|
Postpaid activations
financed
|
80%
|
78%
|
81%
|
|
79%
|
82%
|
Postpaid activations
- operating leases
|
61%
|
59%
|
63%
|
|
60%
|
64%
|
|
|
|
|
|
|
|
Installment
plans
|
|
|
|
|
|
|
Installment sales
financed
|
$
541
|
$
433
|
$
357
|
|
$
1,391
|
$
825
|
Installment
billings
|
$
230
|
$
214
|
$
251
|
|
$
653
|
$
868
|
Installment
receivables, net
|
$
1,250
|
$
1,110
|
$
894
|
|
$
1,250
|
$
894
|
|
|
|
|
|
|
|
Equipment rentals
and depreciation - equipment rentals
|
|
|
|
|
|
|
Equipment
rentals
|
$
1,292
|
$
1,330
|
$
1,313
|
|
$
3,981
|
$
3,778
|
Depreciation -
equipment rentals
|
$
1,011
|
$
1,056
|
$
1,137
|
|
$
3,096
|
$
3,454
|
|
|
|
|
|
|
|
Leased device
additions
|
|
|
|
|
|
|
Cash paid for capital
expenditures - leased devices
|
$
2,147
|
$
1,786
|
$
2,215
|
|
$
5,449
|
$
5,739
|
|
|
|
|
|
|
|
Leased
devices
|
|
|
|
|
|
|
Leased devices in
property, plant and equipment, net
|
$
6,748
|
$
6,378
|
$
6,683
|
|
$
6,748
|
$
6,683
|
|
|
|
|
|
|
|
Leased device
units
|
|
|
|
|
|
|
Leased devices in
property, plant and equipment (units in thousands)
|
15,714
|
15,566
|
15,897
|
|
15,714
|
15,897
|
|
|
|
|
|
|
|
Leased device and
receivables financings net proceeds
|
|
|
|
|
|
|
Proceeds
|
$
1,350
|
$
2,080
|
$
2,200
|
|
$
4,550
|
$
5,083
|
Repayments
|
(747)
|
(2,210)
|
(1,900)
|
|
(3,847)
|
(4,170)
|
Net proceeds
(repayments) of financings related to devices and
receivables
|
$
603
|
$
(130)
|
$
300
|
|
$
703
|
$
913
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
|
|
|
|
|
|
(Millions, except
per share data)
|
|
|
|
|
|
|
|
Quarter To
Date
|
|
Year To
Date
|
|
12/31/19
|
9/30/19
|
12/31/18
|
|
12/31/19
|
12/31/18
|
Net operating
revenues
|
|
|
|
|
|
|
Service
revenue
|
$
5,416
|
$
5,273
|
$
5,699
|
|
$
16,252
|
$
17,201
|
Equipment
sales
|
1,372
|
1,192
|
1,589
|
|
3,784
|
4,180
|
Equipment
rentals
|
1,292
|
1,330
|
1,313
|
|
3,981
|
3,778
|
Total net
operating revenues
|
8,080
|
7,795
|
8,601
|
|
24,017
|
25,159
|
Net operating
expenses
|
|
|
|
|
|
|
Cost of services
(exclusive of depreciation and amortization below)
|
1,718
|
1,775
|
1,648
|
|
5,203
|
5,019
|
Cost of equipment
sales
|
1,646
|
1,359
|
1,734
|
|
4,346
|
4,521
|
Cost of equipment
rentals (exclusive of depreciation below)
|
201
|
240
|
182
|
|
666
|
457
|
Selling, general and
administrative
|
2,045
|
1,936
|
2,003
|
|
5,888
|
5,731
|
Depreciation -
network and other
|
1,071
|
1,065
|
1,088
|
|
3,256
|
3,132
|
Depreciation -
equipment rentals
|
1,011
|
1,056
|
1,137
|
|
3,096
|
3,454
|
Amortization
|
474
|
106
|
145
|
|
698
|
475
|
Other, net
|
(152)
|
21
|
185
|
|
106
|
298
|
Total net operating
expenses
|
8,014
|
7,558
|
8,122
|
|
23,259
|
23,087
|
Operating
income
|
66
|
237
|
479
|
|
758
|
2,072
|
Interest
expense
|
(589)
|
(594)
|
(664)
|
|
(1,802)
|
(1,934)
|
Other (expense)
income, net
|
(6)
|
14
|
32
|
|
36
|
153
|
(Loss) income
before income taxes
|
(529)
|
(343)
|
(153)
|
|
(1,008)
|
291
|
Income tax benefit
(expense)
|
408
|
64
|
8
|
|
494
|
(56)
|
Net (loss)
income
|
(121)
|
(279)
|
(145)
|
|
(514)
|
235
|
Less: Net loss
(income) attributable to noncontrolling interests
|
1
|
5
|
4
|
|
9
|
(4)
|
Net (loss) income
attributable to Sprint Corporation
|
$
(120)
|
$
(274)
|
$
(141)
|
|
$
(505)
|
$
231
|
|
|
|
|
|
|
|
Basic net (loss)
income per common share attributable to Sprint
Corporation
|
$
(0.03)
|
$
(0.07)
|
$
(0.03)
|
|
$
(0.12)
|
$
0.06
|
Diluted net (loss)
income per common share attributable to Sprint
Corporation
|
$
(0.03)
|
$
(0.07)
|
$
(0.03)
|
|
$
(0.12)
|
$
0.06
|
Basic weighted
average common shares outstanding
|
4,109
|
4,098
|
4,078
|
|
4,098
|
4,050
|
Diluted weighted
average common shares outstanding
|
4,109
|
4,098
|
4,078
|
|
4,098
|
4,110
|
|
|
|
|
|
|
|
Effective tax
rate
|
77.1%
|
18.7%
|
5.2%
|
|
49.0%
|
19.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP
RECONCILIATION - NET (LOSS) INCOME TO ADJUSTED EBITDA*
(Unaudited)
|
|
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
Quarter To
Date
|
|
Year To
Date
|
|
12/31/19
|
9/30/19
|
12/31/18
|
|
12/31/19
|
12/31/18
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
(121)
|
$
(279)
|
$
(145)
|
|
$
(514)
|
$
235
|
Income tax (benefit)
expense
|
(408)
|
(64)
|
(8)
|
|
(494)
|
56
|
(Loss) income
before income taxes
|
(529)
|
(343)
|
(153)
|
|
(1,008)
|
291
|
Other expense
(income), net
|
6
|
(14)
|
(32)
|
|
(36)
|
(153)
|
Interest
expense
|
589
|
594
|
664
|
|
1,802
|
1,934
|
Operating
income
|
66
|
237
|
479
|
|
758
|
2,072
|
Depreciation -
network and other
|
1,071
|
1,065
|
1,088
|
|
3,256
|
3,132
|
Depreciation -
equipment rentals
|
1,011
|
1,056
|
1,137
|
|
3,096
|
3,454
|
Amortization
|
474
|
106
|
145
|
|
698
|
475
|
EBITDA*(1)
|
2,622
|
2,464
|
2,849
|
|
7,808
|
9,133
|
Asset impairments
(2)
|
19
|
2
|
-
|
|
231
|
-
|
Loss from asset
dispositions, exchanges, and other, net(3)
|
22
|
-
|
105
|
|
22
|
173
|
Severance and exit
costs (4)
|
20
|
19
|
30
|
|
66
|
63
|
Contract terminations
costs (5)
|
-
|
-
|
-
|
|
-
|
34
|
Merger costs
(6)
|
78
|
69
|
67
|
|
230
|
216
|
Litigation expenses
and other contingencies(7)
|
(270)
|
-
|
50
|
|
(270)
|
50
|
Partial pension
settlement (8)
|
57
|
-
|
-
|
|
57
|
-
|
Hurricanes
(9)
|
-
|
-
|
-
|
|
-
|
(32)
|
Adjusted
EBITDA*(1)
|
$
2,548
|
$
2,554
|
$
3,101
|
|
$
8,144
|
$
9,637
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin*
|
47.0%
|
48.4%
|
54.4%
|
|
50.1%
|
56.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
items:
|
|
|
|
|
|
|
Cash paid for capital
expenditures - network and other
|
$
1,062
|
$
1,109
|
$
1,416
|
|
$
3,360
|
$
3,814
|
Cash paid for capital
expenditures - leased devices
|
$
2,147
|
$
1,786
|
$
2,215
|
|
$
5,449
|
$
5,739
|
WIRELESS
STATEMENTS OF OPERATIONS (Unaudited)
|
|
|
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
Quarter To
Date
|
|
Year To
Date
|
|
12/31/19
|
9/30/19
|
12/31/18
|
|
12/31/19
|
12/31/18
|
Net operating
revenues
|
|
|
|
|
|
|
Service
revenue
|
|
|
|
|
|
|
Postpaid
|
$
4,229
|
$
4,218
|
$
4,236
|
|
$
12,646
|
$
12,679
|
Prepaid
|
740
|
792
|
924
|
|
2,375
|
2,860
|
Wholesale, affiliate
and other
|
226
|
35
|
289
|
|
541
|
868
|
Total service
revenue
|
5,195
|
5,045
|
5,449
|
|
15,562
|
16,407
|
|
|
|
|
|
|
|
Equipment
sales
|
1,372
|
1,192
|
1,589
|
|
3,784
|
4,180
|
Equipment
rentals
|
1,292
|
1,330
|
1,313
|
|
3,981
|
3,778
|
Total net
operating revenues
|
7,859
|
7,567
|
8,351
|
|
23,327
|
24,365
|
|
|
|
|
|
|
|
Net operating
expenses
|
|
|
|
|
|
|
Cost of services
(exclusive of depreciation and amortization below)
|
1,554
|
1,591
|
1,439
|
|
4,664
|
4,334
|
Cost of equipment
sales
|
1,646
|
1,359
|
1,734
|
|
4,346
|
4,521
|
Cost of equipment
rentals (exclusive of depreciation below)
|
201
|
240
|
182
|
|
666
|
457
|
Selling, general and
administrative
|
1,923
|
1,815
|
1,885
|
|
5,517
|
5,338
|
Depreciation -
network and other
|
1,023
|
1,023
|
1,035
|
|
3,116
|
2,975
|
Depreciation -
equipment rentals
|
1,011
|
1,056
|
1,137
|
|
3,096
|
3,454
|
Amortization
|
474
|
106
|
145
|
|
698
|
475
|
Other, net
|
110
|
20
|
185
|
|
360
|
280
|
Total net operating
expenses
|
7,942
|
7,210
|
7,742
|
|
22,463
|
21,834
|
Operating (loss)
income
|
$
(83)
|
$
357
|
$
609
|
|
$
864
|
$
2,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WIRELESS NON-GAAP
RECONCILIATION (Unaudited)
|
|
|
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
Quarter To
Date
|
|
Year To
Date
|
|
12/31/19
|
9/30/19
|
12/31/18
|
|
12/31/19
|
12/31/18
|
|
|
|
|
|
|
|
Operating (loss)
income
|
$
(83)
|
$
357
|
$
609
|
|
$
864
|
$
2,531
|
Asset impairments
(2)
|
19
|
1
|
-
|
|
223
|
-
|
Loss from asset
dispositions, exchanges, and other, net(3)
|
22
|
-
|
105
|
|
22
|
173
|
Severance and exit
costs (4)
|
22
|
19
|
30
|
|
68
|
45
|
Contract terminations
costs (5)
|
-
|
-
|
-
|
|
-
|
34
|
Litigation expenses
and other contingencies (7)
|
5
|
-
|
50
|
|
5
|
50
|
Partial pension
settlement (8)
|
42
|
-
|
-
|
|
42
|
-
|
Hurricanes
(9)
|
-
|
-
|
-
|
|
-
|
(32)
|
Depreciation -
network and other
|
1,023
|
1,023
|
1,035
|
|
3,116
|
2,975
|
Depreciation -
equipment rentals
|
1,011
|
1,056
|
1,137
|
|
3,096
|
3,454
|
Amortization
|
474
|
106
|
145
|
|
698
|
475
|
Adjusted
EBITDA*(1)
|
$
2,535
|
$
2,562
|
$
3,111
|
|
$
8,134
|
$
9,705
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin*
|
48.8%
|
50.8%
|
57.1%
|
|
52.3%
|
59.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
items:
|
|
|
|
|
|
|
Cash paid for capital
expenditures - network and other
|
$
921
|
$
963
|
$
1,242
|
|
$
2,911
|
$
3,362
|
Cash paid for capital
expenditures - leased devices
|
$
2,147
|
$
1,786
|
$
2,215
|
|
$
5,449
|
$
5,739
|
WIRELINE
STATEMENTS OF OPERATIONS (Unaudited)
|
|
|
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
Quarter To
Date
|
|
Year To
Date
|
|
12/31/19
|
9/30/19
|
12/31/18
|
|
12/31/19
|
12/31/18
|
|
|
|
|
|
|
|
Net operating
revenues
|
$
296
|
$
300
|
$
316
|
|
$
903
|
$
982
|
|
|
|
|
|
|
|
Net operating
expenses
|
|
|
|
|
|
|
Cost of services
(exclusive of depreciation and amortization below)
|
238
|
256
|
280
|
|
756
|
886
|
Selling, general and
administrative
|
46
|
49
|
52
|
|
140
|
174
|
Depreciation and
amortization
|
48
|
42
|
51
|
|
137
|
151
|
Other, net
|
(262)
|
1
|
-
|
|
(254)
|
18
|
Total net operating
expenses
|
70
|
348
|
383
|
|
779
|
1,229
|
Operating income
(loss)
|
$
226
|
$
(48)
|
$
(67)
|
|
$
124
|
$
(247)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WIRELINE NON-GAAP
RECONCILIATION (Unaudited)
|
|
|
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
Quarter To
Date
|
|
Year To
Date
|
|
12/31/19
|
9/30/19
|
12/31/18
|
|
12/31/19
|
12/31/18
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
226
|
$
(48)
|
$
(67)
|
|
$
124
|
$
(247)
|
Asset impairments
(2)
|
-
|
1
|
-
|
|
8
|
-
|
Severance and exit
costs (4)
|
(2)
|
-
|
-
|
|
(2)
|
18
|
Litigation expenses
and other contingencies (7)
|
(275)
|
-
|
-
|
|
(275)
|
-
|
Partial pension
settlement (8)
|
15
|
-
|
-
|
|
15
|
-
|
Depreciation and
amortization
|
48
|
42
|
51
|
|
137
|
151
|
Adjusted
EBITDA*
|
$
12
|
$
(5)
|
$
(16)
|
|
$
7
|
$
(78)
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin*
|
4.1%
|
-1.7%
|
-5.1%
|
|
0.8%
|
-7.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
items:
|
|
|
|
|
|
|
Cash paid for capital
expenditures - network and other
|
$
34
|
$
30
|
$
64
|
|
$
92
|
$
170
|
CONDENSED
CONSOLIDATED CASH FLOW INFORMATION (Unaudited)
|
|
|
(Millions)
|
|
|
|
|
|
|
|
|
Year To
Date
|
|
|
|
|
|
12/31/19
|
12/31/18
|
Operating
activities
|
|
|
|
|
|
|
Net (loss)
income
|
|
|
|
|
$
(514)
|
$
235
|
Asset impairments
(2)
|
|
|
|
|
231
|
-
|
Depreciation and
amortization
|
|
|
|
|
7,050
|
7,061
|
Provision for losses
on accounts receivable
|
|
|
|
|
435
|
278
|
Share-based and
long-term incentive compensation expense
|
|
|
|
|
90
|
101
|
Deferred income tax
(benefit) expense
|
|
|
|
|
(532)
|
25
|
Amortization of
long-term debt premiums, net
|
|
|
|
|
(47)
|
(94)
|
Loss on disposal of
property, plant and equipment
|
|
|
|
|
692
|
642
|
Deferred purchase
price from sale of receivables
|
|
|
|
|
-
|
(223)
|
Other changes in
assets and liabilities:
|
|
|
|
|
|
|
Accounts and notes
receivable
|
|
|
|
|
(754)
|
65
|
Inventories and other
current assets
|
|
|
|
|
650
|
248
|
Operating lease
right-of-use assets
|
|
|
|
|
1,280
|
-
|
Accounts payable and
other current liabilities
|
|
|
|
|
(436)
|
(530)
|
Current and long-term
operating lease liabilities
|
|
|
|
|
(1,433)
|
-
|
Non-current assets
and liabilities, net
|
|
|
|
|
(172)
|
(601)
|
Other,
net
|
|
|
|
|
225
|
375
|
Net cash provided
by operating activities
|
|
|
|
|
6,765
|
7,582
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
Capital expenditures
- network and other
|
|
|
|
|
(3,360)
|
(3,814)
|
Capital expenditures
- leased devices
|
|
|
|
|
(5,449)
|
(5,739)
|
Expenditures relating
to FCC licenses
|
|
|
|
|
(24)
|
(145)
|
Change in short-term
investments, net
|
|
|
|
|
5
|
1,467
|
Proceeds from sales
of assets and FCC licenses
|
|
|
|
|
819
|
416
|
Proceeds from
deferred purchase price from sale of receivables
|
|
|
|
|
-
|
223
|
Proceeds from
corporate owned life insurance policies
|
|
|
|
|
5
|
110
|
Other, net
|
|
|
|
|
(27)
|
52
|
Net cash used in
investing activities
|
|
|
|
|
(8,031)
|
(7,430)
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
Proceeds from debt
and financings
|
|
|
|
|
4,731
|
6,416
|
Repayments of debt,
financing and finance lease obligations
|
|
|
|
|
(7,188)
|
(6,937)
|
Debt financing
costs
|
|
|
|
|
(12)
|
(286)
|
Proceeds from
issuance of common stock, net
|
|
|
|
|
(29)
|
281
|
Acquisition of
noncontrolling interest
|
|
|
|
|
(33)
|
-
|
Other, net
|
|
|
|
|
1
|
-
|
Net cash used in
financing activities
|
|
|
|
|
(2,530)
|
(526)
|
|
|
|
|
|
|
|
Net decrease in
cash, cash equivalents and restricted cash
|
|
|
|
|
(3,796)
|
(374)
|
|
|
|
|
|
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
|
|
|
7,063
|
6,659
|
Cash, cash
equivalents and restricted cash, end of period
|
|
|
|
|
$
3,267
|
$
6,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION TO
CONSOLIDATED FREE CASH FLOW* (NON-GAAP) (Unaudited)
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
Quarter To
Date
|
|
Year To
Date
|
|
12/31/19
|
9/30/19
|
12/31/18
|
|
12/31/19
|
12/31/18
|
|
|
|
|
|
|
|
Net cash provided
by operating activities
|
$
1,955
|
$
2,566
|
$
2,225
|
|
$
6,765
|
$
7,582
|
|
|
|
|
|
|
|
Capital expenditures
- network and other
|
(1,062)
|
(1,109)
|
(1,416)
|
|
(3,360)
|
(3,814)
|
Capital expenditures
- leased devices
|
(2,147)
|
(1,786)
|
(2,215)
|
|
(5,449)
|
(5,739)
|
Expenditures relating
to FCC licenses, net
|
(8)
|
(7)
|
(75)
|
|
(24)
|
(145)
|
Proceeds from sales
of assets and FCC licenses
|
220
|
417
|
144
|
|
819
|
416
|
Proceeds from
deferred purchase price from sale of receivables
|
-
|
-
|
-
|
|
-
|
223
|
Other investing
activities, net
|
6
|
4
|
129
|
|
10
|
189
|
Free cash
flow*
|
$
(1,036)
|
$
85
|
$
(1,208)
|
|
$
(1,239)
|
$
(1,288)
|
|
|
|
|
|
|
|
Net proceeds
(repayments) of financings related to devices and
receivables
|
603
|
(130)
|
300
|
|
703
|
913
|
Adjusted free cash
flow*
|
$
(433)
|
$
(45)
|
$
(908)
|
|
$
(536)
|
$
(375)
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
|
|
|
|
(Millions)
|
|
|
|
|
|
12/31/19
|
3/31/19
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
|
$
3,179
|
$
6,982
|
Short-term
investments
|
|
62
|
67
|
Accounts and notes
receivable, net
|
|
3,873
|
3,554
|
Device and accessory
inventory
|
|
1,117
|
999
|
Prepaid expenses and
other current assets
|
|
1,224
|
1,289
|
Total current
assets
|
|
9,455
|
12,891
|
|
|
|
|
Property, plant and
equipment, net
|
|
20,827
|
21,201
|
Costs to acquire a
customer contract
|
|
1,808
|
1,559
|
Operating lease
right-of-use assets
|
|
6,713
|
-
|
Goodwill
|
|
4,598
|
4,598
|
FCC licenses and
other
|
|
41,492
|
41,465
|
Definite-lived
intangible assets, net
|
|
918
|
1,769
|
Other
assets
|
|
1,091
|
1,118
|
Total
assets
|
|
$
86,902
|
$
84,601
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
|
$
3,396
|
$
3,961
|
Accrued expenses and
other current liabilities
|
|
3,335
|
3,597
|
Current operating
lease liabilities
|
|
1,860
|
-
|
Current portion of
long-term debt, financing and finance lease obligations
|
|
3,880
|
4,557
|
Total current
liabilities
|
|
12,471
|
12,115
|
|
|
|
|
Long-term debt,
financing and finance lease obligations
|
|
33,507
|
35,366
|
Long-term operating
lease liabilities
|
|
5,423
|
-
|
Deferred tax
liabilities
|
|
7,038
|
7,556
|
Other
liabilities
|
|
2,708
|
3,437
|
Total
liabilities
|
|
61,147
|
58,474
|
|
|
|
|
Stockholders'
equity
|
|
|
|
Common
stock
|
|
41
|
41
|
Treasury shares, at
cost
|
|
(9)
|
-
|
Paid-in
capital
|
|
28,402
|
28,306
|
Accumulated
deficit
|
|
(2,226)
|
(1,883)
|
Accumulated other
comprehensive loss
|
|
(453)
|
(392)
|
Total stockholders'
equity
|
|
25,755
|
26,072
|
Noncontrolling
interests
|
|
-
|
55
|
Total
equity
|
|
25,755
|
26,127
|
Total liabilities
and equity
|
|
$
86,902
|
$
84,601
|
|
|
|
|
|
|
|
|
NET DEBT*
(NON-GAAP) (Unaudited)
|
|
|
|
(Millions)
|
|
|
|
|
|
12/31/19
|
3/31/19
|
Total debt
|
|
$
37,387
|
$
39,923
|
Less: Cash and cash
equivalents
|
|
(3,179)
|
(6,982)
|
Less: Short-term
investments
|
|
(62)
|
(67)
|
Net
debt*
|
|
$
34,146
|
$
32,874
|
SCHEDULE OF DEBT
(Unaudited)
|
|
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
12/31/19
|
ISSUER
|
|
|
|
MATURITY
|
PRINCIPAL
|
Sprint
Corporation
|
|
|
|
|
|
7.25% Senior notes
due 2021
|
|
|
|
09/15/2021
|
$
2,250
|
7.875% Senior notes
due 2023
|
|
|
|
09/15/2023
|
4,250
|
7.125% Senior notes
due 2024
|
|
|
|
06/15/2024
|
2,500
|
7.625% Senior notes
due 2025
|
|
|
|
02/15/2025
|
1,500
|
7.625% Senior notes
due 2026
|
|
|
|
03/01/2026
|
1,500
|
Sprint
Corporation
|
|
|
|
|
12,000
|
|
|
|
|
|
|
Sprint Spectrum Co
LLC, Sprint Spectrum Co II LLC, and Sprint Spectrum Co III
LLC
|
|
|
|
|
|
3.36% Senior secured
notes due 2021
|
|
|
|
09/20/2021
|
1,531
|
4.738% Senior secured
notes due 2025
|
|
|
|
03/20/2025
|
2,100
|
5.152% Senior secured
notes due 2028
|
|
|
|
03/20/2028
|
1,838
|
Sprint Spectrum Co
LLC, Sprint Spectrum Co II LLC, and Sprint Spectrum Co III
LLC
|
|
|
|
|
5,469
|
|
|
|
|
|
|
Sprint
Communications, Inc.
|
|
|
|
|
|
7% Guaranteed notes
due 2020
|
|
|
|
03/01/2020
|
1,000
|
7% Senior notes due
2020
|
|
|
|
08/15/2020
|
1,500
|
11.5% Senior notes
due 2021
|
|
|
|
11/15/2021
|
1,000
|
6% Senior notes due
2022
|
|
|
|
11/15/2022
|
2,280
|
Sprint
Communications, Inc.
|
|
|
|
|
5,780
|
|
|
|
|
|
|
Sprint Capital
Corporation
|
|
|
|
|
|
6.875% Senior notes
due 2028
|
|
|
|
11/15/2028
|
2,475
|
8.75% Senior notes
due 2032
|
|
|
|
03/15/2032
|
2,000
|
Sprint Capital
Corporation
|
|
|
|
|
4,475
|
|
|
|
|
|
|
Credit
facilities
|
|
|
|
|
|
Secured equipment
credit facilities
|
|
|
|
2021 -
2022
|
505
|
Secured term loans
due 2024
|
|
|
|
02/03/2024
|
5,870
|
Credit
facilities
|
|
|
|
|
6,375
|
|
|
|
|
|
|
Accounts
receivable facility
|
|
|
|
2021
|
3,310
|
|
|
|
|
|
|
Financing
obligations, finance lease and other obligations
|
|
|
|
2020 -
2026
|
349
|
Total
principal
|
|
|
|
|
37,758
|
|
|
|
|
|
|
Net premiums and
debt financing costs
|
|
|
|
|
(371)
|
Total
debt
|
|
|
|
|
$
37,387
|
NOTES TO THE
FINANCIAL INFORMATION (Unaudited)
|
|
|
(1)
|
For customers that
elect to lease a device rather than purchasing one under our
subsidized program, there is a positive impact to EBITDA* and
Adjusted EBITDA* from direct channel sales primarily due to the
fact the cost of the device is not recorded as cost of equipment
sales but rather is depreciated over the customer lease term. Under
our device leasing program for the direct channel, devices are
transferred from inventory to property and equipment and the cost
of the leased device is recognized as depreciation expense over the
customer lease term to an estimated residual value. The customer
payments are recognized as revenue over the term of the lease.
Under our subsidy model, we recognize revenue from the sale of
devices as equipment sales at the point of sale and the cost of the
device is recognized as cost of equipment sales. During the three
and nine month periods ended December 31, 2019, we leased devices
through our Sprint direct channels totaling approximately $1,686
million and $4,015 million, respectively, which would have
increased cost of equipment sales and reduced EBITDA* if they had
been purchased under our subsidized program.
The impact to EBITDA* and Adjusted EBITDA* resulting from the sale
of devices under our installment billing program is generally
neutral except for the impact in our indirect channels from the
time value of money element related to the imputed interest on the
installment receivable.
|
|
|
(2)
|
During the third
quarter of fiscal year 2019, we recognized $19 million of
impairment charges primarily related to an inbound roaming
arrangement with a third party in Puerto Rico. During the second
and first quarters of fiscal year 2019, the company recognized
asset impairment expense primarily related to the sale and
leaseback of our Overland Park, Kansas campus.
|
|
|
(3)
|
During the third
quarter of fiscal year 2019, the company recorded losses on
disposals of property, plant and equipment primarily related to
network costs that are no longer recoverable as a result of changes
in the company's network plans. During the third and second
quarters of fiscal year 2018, the company recorded losses on
disposals of property, plant and equipment primarily related to
cell site construction costs and other network costs that are no
longer recoverable as a result of changes in the company's network
plans.
|
|
|
(4)
|
During the third,
second and first quarters of fiscal year 2019 and third, second and
first quarters of fiscal year 2018, severance and exit costs
consist primarily of exit costs related to access termination
charges and severance costs associated with reductions in work
force.
|
|
|
(5)
|
During the first
quarter of fiscal year 2018, we recognized contract termination
costs associated with the purchase of certain leased spectrum
assets, which upon termination of the spectrum leases resulted in
the accelerated recognition of the unamortized favorable lease
balances.
|
|
|
(6)
|
During the third,
second and first quarters of fiscal year 2019 and third, second and
first quarters of fiscal year 2018, we recorded merger costs of $78
million, $69 million, $83 million, $67 million, $56 million and $93
million, respectively, due to the proposed Business Combination
Agreement with T-Mobile.
|
|
|
(7)
|
During the third
quarter of fiscal year 2019, we had favorable developments in
litigation and other contingencies of $270 million primarily
associated with legal recoveries for patent infringement lawsuits.
During the third quarter of fiscal year 2018, litigation expenses
and other contingencies consist of tax matters settled with the
State of New York.
|
|
|
(8)
|
During the third
quarter of fiscal year 2019, the partial pension settlement is the
result of a plan amendment to the Sprint Retirement Pension Plan to
offer certain terminated participants who had not begun receiving
Plan benefits the opportunity to voluntarily elect to receive their
benefits as an immediate lump sum distribution.
|
|
|
(9)
|
During the second
quarter of fiscal year 2018 we recognized hurricane-related
reimbursements of $32 million.
|
*FINANCIAL MEASURES
Sprint provides financial measures determined in accordance with
GAAP and adjusted GAAP (non-GAAP). The non-GAAP financial measures
reflect industry conventions, or standard measures of liquidity,
profitability or performance commonly used by the investment
community for comparability purposes. These measurements should be
considered in addition to, but not as a substitute for, financial
information prepared in accordance with GAAP. We have defined below
each of the non-GAAP measures we use, but these measures may not be
synonymous to similar measurement terms used by other
companies.
Sprint provides reconciliations of these non-GAAP measures in
its financial reporting. Because Sprint does not predict special
items that might occur in the future, and our forecasts are
developed at a level of detail different than that used to prepare
GAAP-based financial measures, Sprint does not provide
reconciliations to GAAP of its forward-looking financial
measures.
The measures used in this release include the following:
EBITDA is operating income/(loss) before depreciation and
amortization. Adjusted EBITDA is EBITDA excluding
severance, exit costs, and other special items. Adjusted EBITDA
Margin represents Adjusted EBITDA divided by non-equipment net
operating revenues for Wireless and Adjusted EBITDA divided by net
operating revenues for Wireline. We believe that Adjusted EBITDA
and Adjusted EBITDA Margin provide useful information to investors
because they are an indicator of the strength and performance of
our ongoing business operations. While depreciation and
amortization are considered operating costs under GAAP, these
expenses primarily represent non-cash current period costs
associated with the use of long-lived tangible and definite-lived
intangible assets. Adjusted EBITDA and Adjusted EBITDA Margin are
calculations commonly used as a basis for investors, analysts and
credit rating agencies to evaluate and compare the periodic and
future operating performance and value of companies within the
telecommunications industry.
Free Cash Flow is the cash provided by operating
activities less the cash used in investing activities other than
short-term investments and equity method investments.
Adjusted Free Cash Flow is Free Cash Flow plus
the proceeds from device financings and sales of receivables, net
of repayments. We believe that Free Cash Flow and Adjusted Free
Cash Flow provide useful information to investors, analysts and our
management about the cash generated by our core operations and net
proceeds obtained to fund certain leased devices, respectively,
after interest and dividends, if any, and our ability to fund
scheduled debt maturities and other financing activities, including
discretionary refinancing and retirement of debt and purchase or
sale of investments.
Net Debt is consolidated debt, including current
maturities, less cash and cash equivalents and short-term
investments. We believe that Net Debt provides useful information
to investors, analysts and credit rating agencies about the
capacity of the company to reduce the debt load and improve its
capital structure.
SAFE HARBOR
This release includes "forward-looking
statements" within the meaning of the securities laws. The words
"may," "could," "should," "estimate," "project," "forecast,"
"intend," "expect," "anticipate," "believe," "target," "plan",
"outlook," "providing guidance," and similar expressions are
intended to identify information that is not historical in nature.
All statements that address operating performance, events or
developments that we expect or anticipate will occur in the future
— including statements relating to our network, subscriber growth,
and liquidity; and statements expressing general views about future
operating results — are forward-looking statements. Forward-looking
statements are estimates and projections reflecting management's
judgment based on currently available information and involve a
number of risks and uncertainties that could cause actual results
to differ materially from those suggested by the forward-looking
statements. With respect to these forward-looking statements,
management has made assumptions regarding, among other things, the
development and deployment of new technologies and services such as
5G; efficiencies and cost savings of new technologies and services;
customer and network usage; subscriber additions and churn rates;
service, speed, capacity, coverage and quality; availability of
devices; availability of various financings; and the timing of
various events and the economic environment. Sprint believes these
forward-looking statements are reasonable; however, you should not
place undue reliance on forward-looking statements, which are based
on current expectations and speak only as of the date when made.
Sprint undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law. In addition,
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from our company's historical experience and our present
expectations or projections. Factors that might cause such
differences include, but are not limited to, those discussed in
Sprint Corporation's Annual Report on Form 10-K for the fiscal year
ended March 31, 2019 and, when filed,
our Quarterly Report on Form 10-Q for the quarter ended
December 31, 2019. You
should understand that it is not possible to predict or identify
all such factors. Consequently, you should not consider any such
list to be a complete set of all potential risks or
uncertainties.
About Sprint:
Sprint (NYSE: S) is a communications
services company that creates more and better ways to connect
its customers to the things they care about most. Sprint
served 54.2 million connections as of December 31, 2019 and is widely recognized for
developing, engineering and deploying innovative technologies,
including the first wireless 4G service from a national carrier in
the United States; leading
no-contract brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless;
instant national and international push-to-talk capabilities; and a
global Tier 1 Internet backbone. Today, Sprint's legacy of
innovation and service continues with an increased investment to
dramatically improve coverage, reliability, and speed across its
nationwide network and commitment to launching a 5G mobile network
in the U.S. You can learn more and visit Sprint at www.sprint.com
or www.facebook.com/sprint and www.twitter.com/sprint.
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SOURCE Sprint