Telecom Ramblings

PR Archives:  LatestBy Company By Date


Press Release -- July 26th, 2016
Source: Sprint Nextel
Tags:

Sprint Reports Highest First Quarter Postpaid Phone Net Additions in Nine Years, Lowest Ever Postpaid Phone Churn, and Postpaid Net Port Positive Against All Three National Carriers with First Quarter of Fiscal Year 2016 Results

  • Postpaid phone net additions of 173,000 are the fourth consecutive quarter of positive net additions
    • Postpaid phone churn of 1.39 percent is the best in company history and improved year-over-year for the sixth consecutive quarter
    • Postpaid net port positive against all three national carriers for the first time in over five years
  • Net loss of $302 million, Operating income of $361 million and Adjusted EBITDA* of $2.5 billion
    • Over $550 million of year-over-year reduction in cost of service and selling, general, and administrative expenses
  • Net cash provided by operating activities of $542 million improved by more than $400 million year-over-year; Adjusted free cash flow* of $466 million grew by $2.7 billion year-over-year
  • Delivering financial flexibility with nearly $11 billion of liquidity, including $5.1 billion of cash, cash equivalents and short-term investments
    • Successfully raised $5.8 billion of liquidity in the quarter, including $2.2 billion of network-related financing, $1.1 billion from the second transaction with Mobile Leasing Solutions, LLC (MLS), and $2.5 billion under a new unsecured financing facility
  • LTE Plus Network now available in 237 markets
    • 2.5GHz spectrum now carries more of Sprint’s LTE traffic than any other spectrum band

OVERLAND PARK, Kan. (BUSINESS WIRE), July 25, 2016 - Sprint Corporation (NYSE:S, news, filings)today reported operating results for the first quarter of fiscal year 2016, including the lowest postpaid phone churn in company history at 1.39 percent and a total liquidity position of nearly $11 billion. The company also reported total net operating revenues of $8 billion, net loss of $302 million, operating income of $361 million, and Adjusted EBITDA* of $2.5 billion.

“We had another quarter of solid progress in our turnaround with the highest first quarter postpaid phone net additions in nine years1, the lowest postpaid phone churn in company history, and finally being postpaid net port positive against all three national carriers after five years” said Sprint CEO Marcelo Claure. “We also grew wireless net operating revenue year-over-year while aggressively reducing the cash operating expenses of the business and our network is performing better than ever.”

Highest Fiscal First Quarter Postpaid Phone Net Additions in Nine Years1

Sprint’s focus on delivering the best value proposition in wireless resulted in the highest fiscal first quarter postpaid phone net additions in nine years and the fourth consecutive quarter of positive net additions with 173,000 in the quarter compared to net losses of 12,000 in the prior year quarter. The 185,000 year-over-year improvement was driven by both better acquisition and retention, as postpaid phone gross additions were up 10 percent year-over-year and postpaid phone churn of 1.39 percent improved 10 basis points to reach the lowest level in company history. Postpaid phone churn has improved year-over-year for six consecutive quarters.

The company recently launched an advertising campaign featuring Paul Marcarelli, the actor who used to ask if you “could hear me now” for Verizon, to highlight the fact that networks today aren’t that different so why should customers pay more. The campaign has been one of the most successful in company history. The ad has been viewed over 8 million times on YouTube and the company became postpaid net port positive against all three national carriers for the first time in over five years. Can you hear that?

The company also reported the following Sprint platform results:

  • Total net additions were 377,000 in the quarter, including postpaid net additions of 180,000, prepaid net losses of 331,000, and wholesale and affiliate net additions of 528,000.
  • Total postpaid churn of 1.56 percent in the quarter was flat year-over-year.

Top Line Stabilizes as Cost Reductions Continue

With trends improving in its postpaid phone business, Sprint reported total net operating revenues that were flat to the prior year quarter for the first time in over two years. In addition, wireless net operating revenues grew 1 percent year-over-year and postpaid wireless service revenues have remained at $4.8 billion for the last three quarters.

Sprint also made considerable progress in its ongoing effort to transform the cost structure of the business, as the company realized over $550 million year-over-year reduction in cost of services and selling, general and administrative (SG&A) expenses. The company remains on track to achieve its goal of a sustainable reduction of $2 billion or more of run rate operating expenses exiting fiscal year 2016.

The company also reported the following financial results:

  • Net loss of $302 million, or $0.08 per share, in the quarter compared to a net loss of $20 million, or $0.01 per share in the year-ago period. The current quarter included $113 million of non-recurring contract termination charges primarily related to the termination of the pre-existing wholesale arrangement with Ntelos Holding Corp.
  • Operating income of $361 million in the quarter compared to operating income of $501 million in the year-ago quarter. Adjusting for the aforementioned contract termination charges related to the pre-existing wholesale arrangement with Ntelos Holding Corp. in the current quarter, operating income would have been relatively flat year-over-year.
  • Adjusted EBITDA* of $2.5 billion in the quarter grew 18 percent from the prior year period, primarily because of expense reductions, including over $550 million in cost of services and SG&A expenses.
  • Net cash provided by operating activities was $542 million in the quarter compared to $128 million in the prior year. The $414 million year-over-year improvement was driven by expense reductions and favorable changes to working capital.
  • Adjusted free cash flow* was positive $466 million in the quarter compared to negative $2.2 billion in the prior year. The $2.7 billion year-over-year improvement was due to expense reductions, lower capital spending, and net proceeds from our second transaction with MLS.

Liquidity Position Grows to Nearly $11 Billion

Sprint took several actions during the quarter to improve its financial flexibility, including successfully raising $2.2 billion of network-related financing, $1.1 billion from a second transaction with MLS, and $2.5 billion under a new unsecured financing facility, which was increased from its original $2 billion amount within the quarter. These transactions helped increase the company’s liquidity position to nearly $11 billion at the end of the quarter, including $5.1 billion of cash, cash equivalents and short-term investments. Additionally, the company has $1.1 billion of availability under vendor financing agreements that can be used toward the purchase of 2.5GHz network equipment.

The company continues to pursue additional financing initiatives, including additional handset and receivables financing transactions and a securitization involving a small portion of its spectrum assets.

LTE Plus Network Expansion Contributes to Speed and Reliability Performance

Sprint aims to unlock the value of the U.S.’s largest spectrum holding by densifying and optimizing its network to provide customers the best experience. The Sprint LTE Plus Network, which combines a rich tri-band spectrum portfolio with the LTE Advanced features of carrier aggregation and antenna beamforming, launched in 33 additional markets, increasing the total to 237 markets across the country.

Sprint’s LTE Plus Network expansion and its densification and optimization strategy have driven significant improvements in both data speeds and network reliability as noted by several third party sources.

  • Sprint’s LTE Plus Network continued to outperform Verizon, AT&T, and T-Mobile by delivering the fastest LTE download speeds based on recent crowd-sourced data from Nielsen.2 Additionally, Sprint’s reliability beat T-Mobile and performed within 1 percent of AT&T and Verizon.3
  • Independent mobile analytics firm RootMetrics® awarded Sprint 75 percent more first place Network Reliability RootScore® Awards (from 24 to 42) in the 125 markets measured in the first half of 2016 compared to the prior testing period, including wins in Chicago, Houston, and Atlanta.4
  • Sprint’s reliability beat Verizon and its average download speeds beat AT&T and T-Mobile, according to PC Magazine’s Fastest Mobile Networks 2016 report.

Sprint’s deployment of 2.5GHz spectrum has become an integral part of how the company meets the growing data usage and speed demands of its customers, as that spectrum band now carries the highest percentage of Sprint’s LTE data traffic.

Fiscal Year 2016 Outlook

The company continues to expect:

  • Operating income of $1 billion to $1.5 billion
  • Adjusted EBITDA* of $9.5 billion to $10 billion
  • Cash capital expenditures, excluding devices leased through indirect channels, of approximately $3 billion
  • Adjusted free cash flow* around break-even

Conference Call and Webcast

  • Date/Time: 8:30 a.m. (ET) Monday, July 25, 2016
  • Call-in Information
    • U.S./Canada: 866-360-1063 (ID: 43922916)
    • International: 706-634-7849 (ID: 43922916)
  • Webcast available via the Internet at www.sprint.com/investors
  • Additional information about results is available on our Investor Relations website

1 Excludes Nextel migrations

2 Average LTE download speeds based on Sprint analysis of Nielsen Mobile Performance (NMP) data for downloads (150KB+) – NMP 44 Market View (over 155 million POPs).

3 Based on Sprint’s analysis of latest Nielsen drive test data for average network reliability (voice & data) in top 106 markets.

4 Rankings based on RootMetrics 125 Metro RootScore Reports (January-June 2016) for mobile performance as tested on best available plans and devices on 4 mobile networks across all available network types. Your experience may vary. The RootMetrics awards are not an endorsement of Sprint. Visit www.rootmetrics.com.

Wireless Operating Statistics (Unaudited)
Quarter To Date
6/30/16 3/31/16 6/30/15
Sprint platform (1):
Net additions (losses) (in thousands)
Postpaid 180 56 310
Prepaid (331 ) (264 ) (366 )
Wholesale and affiliate 528 655 731
Total Sprint platform wireless net additions 377 447 675
End of period connections (in thousands)
Postpaid (d) 30,945 30,951 30,016
Prepaid (d) 13,974 14,397 15,340
Wholesale and affiliate (d) 14,534 13,458 11,456
Total Sprint platform end of period connections 59,453 58,806 56,812
Churn
Postpaid 1.56 % 1.72 % 1.56 %
Prepaid 5.55 % 5.65 % 5.08 %
Supplemental data - connected devices
End of period connections (in thousands)
Retail postpaid 1,822 1,771 1,439
Wholesale and affiliate 9,244 8,575 6,620
Total 11,066 10,346 8,059
Supplemental data - total company
End of period connections (in thousands)

Sprint platform (1)(d)

59,453 58,806 56,812
Transactions (2) - - 856
Total 59,453 58,806 57,668

Sprint platform ARPU (1) (a)

Postpaid $ 51.54 $ 51.68 $ 55.48
Prepaid $ 27.34 $ 27.72 $ 27.81

Sprint platform postpaid phone

Postpaid phone net additions 173 22 (12 )
Postpaid phone end of period connections (d) 25,322 25,316 24,866
Postpaid phone churn 1.39 % 1.56 % 1.49 %
NON-GAAP RECONCILIATION - ABPA*, POSTPAID PHONE ARPU AND ABPU* (Unaudited)
(Millions, except accounts, connections, ABPA*, ARPU, and ABPU*)
Quarter To Date
6/30/16 3/31/16 6/30/15
Sprint platform ABPA* (1)
Postpaid service revenue $ 4,778 $ 4,793 $ 4,964
Add: Installment plan billings 264 287 298
Add: Lease revenue 755 662 256
Total for Sprint platform postpaid connections $ 5,797 $ 5,742 $ 5,518
Sprint platform postpaid accounts (in thousands) 11,329 11,358 11,175

Sprint platform postpaid ABPA* (b)

$ 170.56 $ 168.49 $ 164.63
Quarter To Date
6/30/16 3/31/16 6/30/15
Sprint platform postpaid phone ARPU and ABPU* (1)
Postpaid phone service revenue $ 4,489 $ 4,512 $ 4,682
Add: Installment plan billings 243 268 282
Add: Lease revenue 741 649 249
Total for Sprint platform postpaid phone connections $ 5,473 $ 5,429 $ 5,213
Sprint platform postpaid average phone connections (in thousands) 25,275 25,297 24,856
Sprint platform postpaid phone ARPU (a) $ 59.20 $ 59.45 $ 62.79
Sprint platform postpaid phone ABPU* (c) $ 72.17 $ 71.53 $ 69.91

(a) 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. Sprint platform postpaid phone ARPU represents revenues related to our postpaid phone connections.

(b) Sprint platform postpaid ABPA* is calculated by dividing service revenue earned from connections plus installment plan billings and lease revenue by the sum of the monthly average number of accounts during the period.

(c) Sprint platform postpaid phone ABPU* is calculated by dividing postpaid phone service revenue earned from postpaid phone connections plus installment plan billings and lease revenue by the sum of the monthly average number of postpaid phone connections during the period.

(d) As part of the transaction involving Shenandoah Telecommunications Company (Shentel), 186,000 and 92,000 subscribers were transferred from postpaid and prepaid, respectively, to affiliates and an additional 270,000 subscribers were acquired from Shentel, which were acquired from their purchase of nTelos.

Wireless Device Financing Summary (Unaudited)
(Millions, except sales, connections, and sales and connections mix)
Quarter To Date
6/30/16 3/31/16 6/30/15
Postpaid sales (in thousands) 3,268 3,438 4,040
Postpaid sales mix
Subsidy/other 31 % 37 % 36 %
Installment plans 25 % 18 % 13 %
Leasing 44 % 45 % 51 %
Postpaid connections (in thousands) 30,945 30,951 30,016
Postpaid connections mix
Subsidy/other 51 % 54 % 69 %
Installment plans 13 % 13 % 15 %
Leasing 36 % 33 % 16 %
Installment plans
Installment sales financed $ 407 $ 311 $ 255
Installment billings 264 287 298
Installments receivables, net - - 1,234
Leasing
Lease revenue $ 755 $ 662 $ 256
Lease depreciation 644 550 276
Leased device additions:
Cash paid for capital expenditures - leased devices $ 405 $ 568 $ 544
Transfers from inventory - leased devices 541 621 808
Leased devices in property, plant and equipment, net $ 3,766 $ 3,645 $ 2,829
Leased device net proceeds
Proceeds from MLS sale $ 1,055 $ - $ -
Repayments to MLS (165 ) - -
Proceeds from lease securitization - 600 -
Repayments of lease securitization (75 ) - -
Net proceeds from device financings and sales of future lease receivables $ 815 $ 600 $ -
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Millions, except per share data)
Quarter To Date
6/30/16 3/31/16 6/30/15
Net operating revenues
Service revenue $ 6,516 $ 6,574 $ 7,037
Equipment revenue 1,496 1,497 990
Total net operating revenues 8,012 8,071 8,027
Net operating expenses
Cost of services (exclusive of depreciation and amortization below) 2,099 2,245 2,393
Cost of products (exclusive of depreciation and amortization below) 1,419 1,551 1,365
Selling, general and administrative 1,917 1,939 2,187
Depreciation - network and other 1,036 1,042 965
Depreciation - leased devices 644 550 276
Amortization 287 300 347
Other, net 249 436 (7 )
Total net operating expenses 7,651 8,063 7,526
Operating income 361 8 501
Interest expense (615 ) (552 ) (542 )
Other income, net 8 5 4
Loss before income taxes (246 ) (539 ) (37 )
Income tax (expense) benefit (56 ) (15 ) 17
Net loss $ (302 ) $ (554 ) $ (20 )
Basic and diluted net loss per common share $ (0.08 ) $ (0.14 ) $ (0.01 )
Weighted average common shares outstanding 3,975 3,972 3,967
Effective tax rate -22.8 % -2.8 % 45.9 %
NON-GAAP RECONCILIATION - NET LOSS TO ADJUSTED EBITDA* (Unaudited)
(Millions)
Quarter To Date
6/30/16 3/31/16 6/30/15
Net loss $ (302 ) $ (554 ) $ (20 )
Income tax expense (benefit) 56 15 (17 )
Loss before income taxes (246 ) (539 ) (37 )
Other income, net (8 ) (5 ) (4 )
Interest expense 615 552 542
Operating income 361 8 501
Depreciation - network and other 1,036 1,042 965
Depreciation - leased devices 644 550 276
Amortization 287 300 347

EBITDA* (3)

2,328 1,900 2,089

Loss from asset dispositions and exchanges, net (4)

- 81 -
Severance and exit costs (5) 16 162 13
Contract terminations (6) 113 - -
Litigation (7) - 15 -
Reduction in liability - U.S. Cellular asset acquisition (8) - - (20 )
Adjusted EBITDA* (3) $ 2,457 $ 2,158 $ 2,082
Adjusted EBITDA margin* 37.7 % 32.8 % 29.6 %
Selected items:
Cash paid for capital expenditures - network and other $ 473 $ 722 $ 1,802
Cash paid for capital expenditures - leased devices $ 405 $ 568 $ 544
WIRELESS STATEMENTS OF OPERATIONS (Unaudited)
(Millions)
Quarter To Date
6/30/16 3/31/16 6/30/15
Net operating revenues
Service revenue

Sprint platform (1):

Postpaid $ 4,778 $ 4,793 $ 4,964
Prepaid 1,165 1,203 1,300
Wholesale, affiliate and other 158 155 181
Total Sprint platform 6,101 6,151 6,445
Total transactions (2) - 3 105
Total service revenue 6,101 6,154 6,550
Equipment revenue 1,496 1,497 990
Total net operating revenues 7,597 7,651 7,540
Net operating expenses
Cost of services (exclusive of depreciation and amortization below) 1,784 1,922 2,005
Cost of products (exclusive of depreciation and amortization below) 1,419 1,551 1,365
Selling, general and administrative 1,834 1,868 2,096
Depreciation - network and other 985 991 917
Depreciation - leased devices 644 550 276
Amortization 287 300 347
Other, net 249 434 (8 )
Total net operating expenses 7,202 7,616 6,998
Operating income $ 395 $ 35 $ 542
WIRELESS NON-GAAP RECONCILIATION (Unaudited)
(Millions)
Quarter To Date
6/30/16 3/31/16 6/30/15
Operating income $ 395 $ 35 $ 542

Loss from asset dispositions and exchanges, net (4)

- 81 -
Severance and exit costs (5) 16 160 12
Contract terminations (6) 113 - -
Litigation (7) - 15 -
Reduction in liability - U.S. Cellular asset acquisition (8) - - (20 )
Depreciation - network and other 985 991 917
Depreciation - leased devices 644 550 276
Amortization 287 300 347

Adjusted EBITDA* (3)

$ 2,440 $ 2,132 $ 2,074
Adjusted EBITDA margin* 40.0 % 34.6 % 31.7 %
Selected items:
Cash paid for capital expenditures - network and other $ 376 $ 577 $ 1,640
Cash paid for capital expenditures - leased devices $ 405 $ 568 $ 544
WIRELINE STATEMENTS OF OPERATIONS (Unaudited)
(Millions)
Quarter To Date
6/30/16 3/31/16 6/30/15
Net operating revenues
Voice $ 181 $ 194 $ 233
Data 43 37 49
Internet 302 316 328
Other 19 15 20
Total net operating revenues 545 562 630
Net operating expenses
Costs of services (exclusive of depreciation and amortization below) 448 467 534
Selling, general and administrative 78 74 87
Depreciation and amortization 49 50 46
Other, net - 3 1
Total net operating expenses 575 594 668
Operating loss $ (30 ) $ (32 ) $ (38 )
WIRELINE NON-GAAP RECONCILIATION (Unaudited)
(Millions)
Quarter To Date
6/30/16 3/31/16 6/30/15
Operating loss $ (30 ) $ (32 ) $ (38 )
Severance and exit costs (5) - 3 1
Depreciation and amortization 49 50 46
Adjusted EBITDA* $ 19 $ 21 $ 9
Adjusted EBITDA margin* 3.5 % 3.7 % 1.4 %
Selected items:
Cash paid for capital expenditures - network and other $ 20 $ 74 $ 68
CONDENSED CONSOLIDATED CASH FLOW INFORMATION (Unaudited)**
(Millions)
Quarter To Date
6/30/16 3/31/16 6/30/15
Operating activities
Net loss $ (302 ) $ (554 ) $ (20 )
Depreciation and amortization 1,967 1,892 1,588
Provision for losses on accounts receivable 93 70 163
Share-based and long-term incentive compensation expense 15 17 18
Deferred income tax expense (benefit) 46 3 (13 )
Amortization of long-term debt premiums, net (80 ) (80 ) (78 )
Loss on disposal of property, plant and equipment 120 259 -
Contract terminations 96 - -
Other changes in assets and liabilities:
Accounts and notes receivable (106 ) (181 ) (1,683 )
Inventories and other current assets (98 ) (900 ) (315 )
Deferred purchase price from sale of receivables (117 ) 430 1,184
Accounts payable and other current liabilities (1,016 ) 242 (867 )
Non-current assets and liabilities, net (159 ) (1 ) 83
Other, net 83 97 68
Net cash provided by operating activities 542 1,294 128
Investing activities
Capital expenditures - network and other (473 ) (722 ) (1,802 )
Capital expenditures - leased devices (405 ) (568 ) (544 )
Expenditures relating to FCC licenses (15 ) (23 ) (26 )
Change in short-term investments, net (1,304 ) 41 (37 )
Proceeds from sales of assets and FCC licenses 27 26 1
Other, net (25 ) (4 ) (3 )
Net cash used in investing activities (2,195 ) (1,250 ) (2,411 )
Financing activities
Proceeds from debt and financings 3,255 600 346
Repayments of debt, financing and capital lease obligations (294 ) (172 ) (26 )
Debt financing costs (175 ) (10 ) (1 )
Other, net 6 4 14
Net cash provided by financing activities 2,792 422 333
Net increase (decrease) in cash and cash equivalents 1,139 466 (1,950 )
Cash and cash equivalents, beginning of period 2,641 2,175 4,010
Cash and cash equivalents, end of period $ 3,780 $ 2,641 $ 2,060
RECONCILIATION TO CONSOLIDATED FREE CASH FLOW* (NON-GAAP) (Unaudited)
(Millions)
Quarter To Date
6/30/16 3/31/16 6/30/15
Net cash provided by operating activities $ 542 $ 1,294 $ 128
Capital expenditures - network and other (473 ) (722 ) (1,802 )
Capital expenditures - leased devices (405 ) (568 ) (544 )
Expenditures relating to FCC licenses, net (15 ) (23 ) (26 )
Proceeds from sales of assets and FCC licenses 27 26 1
Other investing activities, net (25 ) (4 ) (3 )
Free cash flow* $ (349 ) $ 3 $ (2,246 )
Net proceeds from device financings and sales of future lease receivables 815 600 -
Adjusted free cash flow* $ 466 $ 603 $ (2,246 )

**Certain prior period amounts have been reclassified to conform to the current period presentation.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Millions)
6/30/16 3/31/16
ASSETS
Current assets
Cash and cash equivalents $ 3,780 $ 2,641
Short-term investments 1,304 -
Accounts and notes receivable, net 1,113 1,099
Device and accessory inventory 816 1,173
Prepaid expenses and other current assets 1,949 1,920
Total current assets 8,962 6,833
Property, plant and equipment, net 19,715 20,297
Goodwill 6,575 6,575
FCC licenses and other 40,175 40,073
Definite-lived intangible assets, net 4,157 4,469
Other assets 811 728
Total assets $ 80,395 $ 78,975
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 1,841 $ 2,899
Accrued expenses and other current liabilities 4,245 4,374
Current portion of long-term debt, financing and capital lease obligations 5,603 4,690
Total current liabilities 11,689 11,963
Long-term debt, financing and capital lease obligations 31,354 29,268
Deferred tax liabilities 14,006 13,959
Other liabilities 3,844 4,002
Total liabilities 60,893 59,192
Stockholders' equity
Common stock 40 40
Treasury shares, at cost - (3 )
Paid-in capital 27,582 27,563
Accumulated deficit (7,680 ) (7,378 )
Accumulated other comprehensive loss (440 ) (439 )
Total stockholders' equity 19,502 19,783
Total liabilities and stockholders' equity $ 80,395 $ 78,975
NET DEBT* (NON-GAAP) (Unaudited)
(Millions)
6/30/16 3/31/16
Total debt $ 36,957 $ 33,958
Less: Cash and cash equivalents (3,780 ) (2,641 )
Less: Short-term investments (1,304 ) -
Net debt* $ 31,873 $ 31,317
SCHEDULE OF DEBT (Unaudited)
(Millions)
6/30/16
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
Sprint Corporation 10,500
Sprint Communications, Inc.
Export Development Canada Facility (Tranche 4) 12/15/2017 250
Export Development Canada Facility (Tranche 3) 12/17/2019 300
6% Senior notes due 2016 12/01/2016 2,000
9.125% Senior notes due 2017 03/01/2017 1,000
8.375% Senior notes due 2017 08/15/2017 1,300
9% Guaranteed notes due 2018 11/15/2018 3,000
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
9.25% Debentures due 2022 04/15/2022 200
6% Senior notes due 2022 11/15/2022 2,280
Sprint Communications, Inc. 13,830
Sprint Capital Corporation
6.9% Senior notes due 2019 05/01/2019 1,729
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 6,204
Clearwire Communications LLC
14.75% First-priority senior secured notes due 2016 12/01/2016 300
8.25% Exchangeable notes due 2040 12/01/2040 629
Clearwire Communications LLC 929
Secured equipment credit facilities 2017 - 2021 773
Financing obligations 2017 - 2021 3,833
Capital leases and other obligations 2016 - 2023 492
Total principal 36,561
Net premiums and debt financing costs 396
Total debt $ 36,957

NOTES TO THE FINANCIAL INFORMATION (Unaudited)

(1) Sprint platform refers to the Sprint network that supports the wireless service we provide through our multiple brands.
(2) Postpaid and prepaid connections from transactions are defined as retail postpaid and prepaid connections acquired from Clearwire in July 2013 who had not deactivated or been recaptured on the Sprint platform.
(3) As more of our customers elect to lease a device rather than purchasing one under our subsidized program, there is a significant 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 products 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 subsidized program, the cash received from the customer for the device is recognized as equipment revenue at the point of sale and the cost of the device is recognized as cost of products. During the three-month period ended June 30, 2016, we leased devices through our Sprint direct channels totaling approximately $540 million, which would have increased cost of products and reduced EBITDA* if they had been purchased under our subsidized program. Also, during the three-month period ended June 30, 2016, the equipment revenue derived from customers electing to finance their devices through device leasing or installment billing programs in our direct channel was 67%.
The impact to EBITDA* and Adjusted EBITDA* resulting from the sale of devices under our installment billing program is neutral except for the impact from the time value of money element related to the imputed interest on the installment receivable.
(4) During the fourth quarter of fiscal year 2015, we recorded losses on dispositions of assets primarily related to network development costs that are no longer relevant as a result of changes in the Company's network plans.
(5) Severance and exit costs consist of lease exit costs primarily associated with tower and cell sites, access exit costs related to payments that will continue to be made under our backhaul access contracts for which we will no longer be receiving any economic benefit, and severance costs associated with reduction in our work force.
(6) Contract terminations primarily relate to the termination of our pre-existing wholesale arrangement with Ntelos Holding Corp.
(7) For the fourth quarter of fiscal year 2015, litigation activity is a result of unfavorable developments in connection with pending litigation.
(8) As a result of the U.S. Cellular asset acquisition, we recorded a liability related to network shut-down costs, which primarily consisted of lease exit costs, for which we agreed to reimburse U.S. Cellular. During the third quarter of fiscal year 2014, we identified favorable trends in actual costs and, as a result, reduced the liability resulting in a gain of approximately $41 million. During the first quarter of fiscal year 2015, we revised our estimate and, as a result, reduced the liability resulting in approximately $20 million of income.

*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.

Sprint Platform Postpaid ABPA is average billings per account and calculated by dividing postpaid service revenue earned from postpaid customers plus installment plan billings and lease revenue by the sum of the monthly average number of postpaid accounts during the period. We believe that ABPA provides useful information to investors, analysts and our management to evaluate average Sprint platform postpaid customer billings per account as it approximates the expected cash collections, including installment plan billings and lease revenue, per postpaid account each month.

Sprint Platform Postpaid Phone ABPU is average billings per postpaid phone user and calculated by dividing service revenue earned from postpaid phone customers plus installment plan billings and lease revenue by the sum of the monthly average number of postpaid phone connections during the period. We believe that ABPU provides useful information to investors, analysts and our management to evaluate average Sprint platform postpaid phone customer billings as it approximates the expected cash collections, including installment plan billings and lease revenue, per postpaid phone user each month.

Free Cash Flow is the cash provided by operating activities less the cash used in investing activities other than short-term investments, including changes in restricted cash, if any, and excluding the sale-leaseback of devices. Adjusted Free Cash Flow is Free Cash Flow plus the proceeds from device financings and sales of future lease 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, short-term investments and, if any, restricted cash. 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, connections 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; efficiencies and cost savings of new technologies and services; customer and network usage; connection growth and retention; service, speed, coverage and quality; availability of devices; availability of various financings, including any leasing transactions; 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, 2016. 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 more than 59.4 million connections as of June 30, 2016 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. Sprint has been named to the Dow Jones Sustainability Index (DJSI) North America for the past five years. You can learn more and visit Sprint atwww.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.

CONTACT(S):

Sprint Corporation
Media:
Dave Tovar,913-315-1451
David.Tovar@sprint.com
or
Investors:
Jud Henry,800-259-3755
Investor.Relations@sprint.com

PR Archives: Latest, By Company, By Date