Sprint on Wednesday announced adding 87,000 net postpaid phone subscribers in the latest quarter, as the carrier works to gain approval for its proposed merger with T-Mobile.
Additions in the lucrative postpaid phone category improved sequentially and beat analysts’ estimates of 40,000 gains, but were similar to what the No. 4 U.S. wireless carrier reported in the year ago period. Sprint posted 3,000 prepaid additions, down from the 35,000 it added last year. The carrier indicated that its pre-paid unit Boost Mobile saw continued strength, but was partially offset by losses in other brands. The company said 71,000 prepaid customers moved to non-Sprint postpaid services during the quarter.
Overall, Sprint added a net 57,000 wireless subscribers for the three-month period ending June 30, leaving it with a total of 54.6 million customers.
Postpaid churn, and postpaid phone-only churn, while still high compared to peers, were both down for the third consecutive quarter at 1.63 percent and 1.55 percent, respectively. A year ago postpaid phone churn was at 1.50 percent.
Despite the additions, MoffettNathanson analyst Craig Moffett indicated in a Wednesday research note that the firm suspects added subscribers might have come from a Sprint offer that let subscribers get free third, fourth and fifth lines – a deal that ended shortly after the close of the quarter.
“So it will be telling to see whether unit metrics fall towards the weaker account-level metrics absent the support of give-away economics,” Moffett wrote.
Sprint came out with higher cost unlimited data plans in July, and CEO Michael Combes on Wednesday earnings call indicated the carrier expects to add more subscribers throughout the year, despite pressure from costlier plans.
Combes also indicated that low-cost digital promotions, like the carrier’s latest offer of $8 per month to lease an iPhone 8, will continued to be used to help sales.
“We strongly believe in the digital platform to boost sales going forward,” Combes said.
Sprint posted a net profit of $173 million, or 4 cents a share, compared to $206 million, or 5 cents a share in the year ago period. Total revenue of $8.13 billion beat analysts’ expectations of $8.06 billion, according to Wells Fargo. Wireless service revenue was $5.46 billion – experiencing sequential growth for the first time in more than four years – while equipment revenue was $2.93 billion.
“Sprint continued to deliver solid results this quarter while embarking on our transformative merger with T-Mobile,” said Combes in a statement. “By balancing growth and profitability, we were able to grow wireless service revenue sequentially, continue to add retail phone customers, generate net income for the third consecutive quarter, and improve the network.”
Still, Sprint must secure regulatory approvals for the prosed $26 billion deal, and without it Moffett isn’t sure the carrier can continue on as-is.
“To us, absent a merger with T-Mobile, Sprint still doesn’t look sustainable,” Moffett wrote. “To some, that observation alone might suggest that regulators will feel compelled to approve the merger. But as we’ve pointed out in the past, the regulators’ job is not to protect failing companies, it is to protect consumers. We still can’t say with any confidence which way they will fall.”
