uploads///Sprint Q Pre Adjusted EBITDA

Can Sprint Deliver EBITDA Growth in Fiscal 3Q16?


Jan. 19 2017, Updated 10:37 a.m. ET

Sprint’s EBITDA growth in fiscal 3Q16

Sprint’s (S) expected adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin could be impacted by the elevated competitive intensity in the industry in fiscal 3Q16. Sprint anticipates its adjusted EBITDA to be in the range of $9.5 billion–$10 billion for fiscal 2016.

In fiscal 2015, the company’s adjusted EBITDA was ~$8.1 billion. The company’s adjusted EBITDA was ~$2.3 billion in fiscal 2Q16, as compared to ~$2 billion in fiscal 2Q15. Its adjusted EBITDA margin rose to 36.6% in fiscal 2Q16 from 29.2% in fiscal 2Q15.

The main reasons for this increase included cost reductions and the shift toward handset leasing. In the first six months of fiscal 2016, Sprint has realized more than $1.1 billion in cost reductions, of which ~$600 million was realized in fiscal 2Q16.

As a result, Sprint remains on track to save more than $2 billion in costs during fiscal 2016 and has plans for further reductions in fiscal 2017 and beyond. Notably, it eliminated $1.3 billion in costs in fiscal 2015.

Sprint is also using a combination of layoffs and expense curtailment as it presses toward sustainable profitability. The carrier cut 2,500 jobs in 2016. Growing its top line is also supporting Sprint’s path to profitability.

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Peer EBITDA margin comparisons

According to the company’s filings, in 3Q16, T-Mobile’s (TMUS) adjusted EBITDA margin was 37%. AT&T (T) and Verizon Communications (VZ) reported adjusted EBITDA margins of 41.2% and 36.5%, respectively. AT&T is enjoying higher margins than competitors due to the cost synergies associated with its DIRECTV acquisition.

Continue to the next part for a look at Sprint’s postpaid phone subscriber net additions.


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