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Sprint’s Adjusted Earnings Nearly Doubled in Fiscal 3Q15

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Sprint’s core operating profitability in fiscal 3Q15

In the previous parts of this series, we looked at some key financial and customer metrics of Sprint’s (S) wireless segment in fiscal 3Q15. We learned that this segment’s revenue fell by ~9% YoY (year-over-year) to ~$7.7 billion during the quarter. Sprint’s wireline revenue also continued to shrink YoY in fiscal 3Q15. This revenue stream fell by ~16% YoY to reach ~$0.58 billion during the quarter. In the same quarter, Sprint’s consolidated revenue fell by ~9.7% YoY to ~$8.1 billion. Meanwhile, Sprint’s core operating profitability improved YoY during fiscal 3Q15.

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The telecom (telecommunications) player’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) grew robustly on a YoY basis from ~$1 billion in fiscal 3Q14 to ~$1.9 billion in fiscal 3Q15. The YoY improvement in Sprint’s margin was significant during fiscal 3Q15. Sprint’s adjusted EBITDA margin expanded from ~11.6% in fiscal 3Q14 to ~23.4% in fiscal 3Q15.

Sprint’s wireless margins in fiscal 3Q15

Sprint’s wireless segment’s adjusted EBITDA margin expanded from ~12.3% in fiscal 3Q14 to ~24.3% in fiscal 3Q15.

Adoption of leasing plans for devices positively impacted Sprint’s wireless margins during the quarter. The penetration of these plans in the telecom company’s postpaid customer base was ~30% at the end of fiscal 3Q15. Note that among the top four US mobile players, only Sprint and T-Mobile (TMUS) offer leasing plans. Verizon (VZ) and AT&T (T) don’t get into leasing.

For diversified exposure to US telecom companies, you may consider investing in the Technology Select Sector SPDR Fund (XLK).

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