What’s the Outlook for Sprint?



Sprint’s turnaround efforts

Sprint (S) has begun to gain traction in its turnaround efforts in an intensely competitive US wireless environment. In fiscal 2Q17 (the quarter ended September 2017), Sprint reported slightly softer-than-expected total net operating revenue and stronger-than-expected adjusted EBITDA (earnings before interest, tax, depreciation, and amortization).

Additionally, the telecom company gained 279,000 postpaid phone net customers—more than it had expected—in the quarter.

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Key points from Sprint’s outlook

Sprint’s management expects the company’s adjusted EBITDA to be in the range of $10.8 billion–$11.2 billion in fiscal 2017 (the year ending March 2018) mainly due to an ongoing focus on significant cost reductions. Likewise, management expects Sprint’s operating income to be in the range of $2.1 billion–$2.5 billion in fiscal 2017. The company expects to save an additional $1.3 billion–$1.5 billion in costs during fiscal 2017.

Sprint’s management has also forecast that its cash capital expenditure will be in the range of $3.5 billion–$4.0 billion in fiscal 2017, excluding devices leased through indirect channels, as the company ramps up its densification plan. Furthermore, management expects its adjusted free cash flow (or FCF) to be around breakeven.

Wall Street analysts expect Sprint’s EPS (earnings per share) to be -$0.01 in fiscal 2017 compared to -$0.30 in fiscal 2016.

About Sprint

As of the end of 3Q17, by subscribers, Sprint remains the fourth-largest player in the US (SPY) wireless industry. Verizon (VZ) and AT&T (T) are the other two large telecom companies in this market. T-Mobile (TMUS) had the third-largest wireless customer base in the United States at the end of the same quarter.


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