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Sprint CEO Marcelo Claure’s cost cutting strategy brings profit

Sprint retail presenceSprint CEO Marcelo Claure’s cost cutting strategy is paying off. The US telecom operator has posted a net income at a time when the Japanese promoters are trying to save the company by merging with Charter Communications.

Sprint, a SoftBank-owned telecom operator, posted operating revenue of $8.2 billion, net income of $206 million, operating income of $1.2 billion, and Adjusted EBITDA of $2.9 billion in the first quarter of fiscal year 2017.

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This was Sprint’s first net income in three years and the highest Adjusted EBITDA in nearly 10 years. The company also reported net operating revenues of $8.2 billion, its fourth consecutive quarter of year-over-year growth, and 88,000 postpaid phone net additions, its eighth consecutive quarter of net additions.

“This represents the progress of a turnaround journey that has delivered improvements in postpaid phone and prepaid customer growth, a return to top-line growth, and a significantly transformed cost structure,” said Sprint CEO Marcelo Claure.

Sprint achieved nearly $370 million of combined reductions in cost of services and SG&A expenses in the quarter, bringing the total reduction during the last nine quarters to nearly $4 billion.

Sprint CEO said the cost-reduction program contributed to a return to profitability, as the company reported net income for the first time in three years.

Sprint expects an additional $1.3 billion to $1.5 billion of net reductions in cost of services and SG&A expenses in fiscal year 2017. Although the gross reductions are expected to be higher, the company plans to reinvest some of the savings into future growth initiatives.

Sprint has added 88,000 postpaid phone connections in the quarter, its eighth consecutive quarter of net additions. Postpaid phone gross additions also grew for the sixth consecutive quarter and were the highest first-quarter result in five years.

Prepaid net additions of 35,000 contributed to sequential growth in prepaid service revenue for the first time in six quarters.

Sprint added 61,000 total users in the quarter. Sprint lost 39,000 postpaid users and added 35,000 prepaid users.

Sprint reduced postpaid phone churn to 1.5 percent and total postpaid churn was 1.65 percent.

Sprint said its capital expenditure (Capex) excluding devices leased through indirect channels will be $3.5 billion to $4 billion during the current fiscal.

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