February 2, 2018 / 1:43 PM / 2 months ago

Sprint beats on quarterly revenue, raises outlook; shares jump

NEW YORK (Reuters) - Sprint Corp reported quarterly revenue on Friday that beat analyst estimates, as the No. 4 U.S. wireless carrier raised its free cash flow outlook for the 2017 fiscal year.

Shares rose 3.7 percent to $5.29 in early trading, a day after sliding 5.7 percent to their lowest in a year and a half.

The company has sought to strengthen its balance sheet by cutting costs and mortgaging a portion of its airwaves and equipment, but industry analysts have raised concerns about how it can adequately fund network improvements after merger talks with rival T-Mobile US Inc ended last year.

Sprint now expects $2.5 billion to $2.7 billion in operating income, up from its previous estimate of $2.1 billion to $2.5 billion. It expects adjusted free cash flow of $500 million to $700 million, compared to previous estimates of breaking even.

“We think recent weakness in shares is reflective of lowered investor expectations, while in-line to slightly better financial results could provide some near-term relief,” said Matthew Niknam, analyst at Deutsche Bank, in a research note.

On the post-earnings conference call, Sprint Chief Executive Officer Marcelo Claure said Sprint would launch a mobile 5G network in the United States by the first half of 2019.

FILE PHOTO: The logo of U.S. mobile network operator Sprint Corp is seen at a Sprint store in San Marcos, California August 3, 2015. REUTERS/Mike Blake/File Photo

The company is also looking for ways to reduce the number of executives at the top, he said. Sprint cut costs by about $260 million in the quarter, excluding $100 million of hurricane-related charges.

Claure said “becoming a wholly owned subsidiary of (SoftBank Group Corp) could be a possibility” but that the decision would be up to SoftBank Chief Executive Masayoshi Son. Japan’s SoftBank owns a majority of Sprint and has been increasing its stake.

For the quarter, Sprint reported net additions of 184,000 phone subscribers who pay a monthly bill, compared to additions of 368,000 a year earlier.

Net operating revenue in the third quarter ended Dec. 31 was $8.24 billion, down from $8.55 billion a year earlier.

Sprint reported quarterly net income of $7.16 billion, or $1.79 per share, due to the impact of federal tax reforms, after a loss of $479 million, or 12 cents per share, a year earlier.

Excluding the impact of tax cuts signed into law by U.S. President Donald Trump late last year, net income was 3 cents a share.

According to Thomson Reuters I/B/E/S, analysts had expected revenue of $8.15 billion and a net loss of 4 cents a share.

Reporting by Anjali Athavaley; Editing by Bernadette Baum and David Gregorio

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