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How Is Sprint Progressing with Its Cost-Cutting Initiatives?

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Cost-cutting to combat losses

Although in terms of customers, Sprint (S) remains the fourth-largest telecom company in the US (SPY) wireless space, its significant cost-cutting initiatives and its shift away from the traditional subsidy model have contributed to its turnaround efforts. During fiscal 2Q17 (the quarter ended September 2017), the company realized nearly $400 million in net cost reductions. The mobile carrier eliminated $2.1 billion in costs during fiscal 2016. These cost reductions were significant for Sprint as it continued to generate losses.

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In fiscal 2Q17, Sprint reported a net income of -$48 million compared to its net income of -$142 million in the corresponding period of the previous year. The company reported an EPS (earnings per share) loss of $0.01 in fiscal 2Q17, signaling a significant improvement from its EPS loss of $0.04 in fiscal 2Q16.

Sprint’s management expects to save an additional $1.3 billion–$1.5 billion in costs during fiscal 2017. With more than $750 million saved so far, the company is halfway through its high-end cost-reduction target for fiscal 2017.

Highest quarterly EBITDA for a fiscal second quarter

In fiscal 2Q17, Sprint reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $2.7 billion, its highest quarterly adjusted EBITDA for a fiscal second quarter in a decade.

Sprint also showed no signs of slowing down. It reported 279,000 postpaid phone customer net additions in fiscal 2Q17, which marked its ninth consecutive quarter of net additions. Meanwhile, Verizon (VZ) and T-Mobile (TMUS) gained 274,000 and 595,000 postpaid phone net customers, respectively, in 3Q17, whereas AT&T (T) lost 97,000 postpaid phone customers during the same quarter.

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