OVERLAND PARK, Kan. (BUSINESS WIRE), August 01, 2017 – Sprint Corporation (NYSE:S) today reported operating results for the first quarter of fiscal year 2017, including net income for the first time in three years at $206 million and the highest Adjusted EBITDA in nearly 10 years at $2.9 billion. The company also reported net operating revenues of $8.2 billion, its fourth consecutive quarter of year-over-year growth, and 88,000 postpaid phone net additions, its eighth consecutive quarter of net additions.

“Sprint reached an important milestone this quarter by returning to profitability for the first time in three years,” said Sprint CEO Marcelo Claure. “This represents the progress of a turnaround journey that has delivered improvements in postpaid phone and prepaid customer growth, a return to top-line growth, and a significantly transformed cost structure.”

Cost Reduction Program Contributes to Net Income for the First Time in Three Years

Sprint continued to make progress on its multiyear plan to transform the way it does business and improve its cost structure. The company delivered nearly $370 million of combined year-over-year reductions in cost of services and SG&A expenses in the quarter, bringing the total reduction during the last nine quarters to nearly $4 billion.

The ongoing cost-reduction program contributed to a return to profitability this quarter, as the company reported net income for the first time in three years. Excluding the after-tax benefit of non-recurring items in the quarter, Sprint would have reported net income of more than $150 million, demonstrating the improved underlying trends of the business.

Sprint expects an additional $1.3 billion to $1.5 billion of year-over-year net reductions in cost of services and SG&A expenses in fiscal year 2017. Although the gross reductions are expected to be higher, the company plans to reinvest some of the savings into future growth initiatives.

The company also reported the following financial results:

Fiscal 1Q17 Fiscal 1Q16 Change Net operating revenues $8,157 $8,012 $145 Net income/(loss) $206 ($302) $508 Basic earnings/(loss) per share $0.05 ($0.08) $0.13 Operating income $1,163 $361 $802 Adjusted EBITDA* $2,853 $2,457 $396 Net cash provided by operating activities $1,280 $542 $738 Adjusted free cash flow* $239 $466 ($227)

Eight Straight Quarters of Postpaid Phone Customer Growth

Sprint’s focus on delivering the most attractive value proposition in wireless resulted in 88,000 postpaid phone net additions in the quarter, its eighth consecutive quarter of net additions. Postpaid phone gross additions also grew year-over-year for the sixth consecutive quarter and were the highest first-quarter result in five years.

The recent turnaround of Sprint’s prepaid business has been driven by its higher revenue-generating brands. Prepaid net additions of 35,000 were positive for the second consecutive quarter and contributed to sequential growth in prepaid service revenue for the first time in six quarters.

The company also reported the following results:

Total net additions were 61,000 in the quarter, including postpaid net losses of 39,000, prepaid net additions of 35,000, and wholesale and affiliate net additions of 65,000.

Postpaid phone churn was 1.50 percent and total postpaid churn was 1.65 percent.

Sprint Network Continues to Improve

Sprint is unlocking the value of the largest spectrum holdings in the U.S. by densifying and optimizing its network. The company has already deployed thousands of small cell solutions, including the recently announced Sprint Magic Box, the world’s first all-wireless small cell.

Network performance improvements have been validated by numerous third-party sources:

RootMetrics® awarded Sprint more than 25 percent more first-place (outright or shared) Metropolitan area RootScore® Awards (from 166 to 211) for reliability, speed, data, call, text or overall network performance in the first half of 2017 compared to the year-ago testing period. 1

Sprint’s overall network reliability continues to perform within 1 percent of Verizon and AT&T, based on an analysis of Nielsen data. 2

Sprint’s average download speeds have increased 20 percent in the last six months, according to Ookla’s Speedtest Intelligence data for all results from January through June 2017.

Fiscal Year 2017 Outlook

The company is increasing the low end of its previous Adjusted EBITDA* expectations and now expects $10.8 billion to $11.2 billion for fiscal year 2017. The previous expectation was $10.7 billion to $11.2 billion.

The company is increasing the low end of its previous operating income expectations and now expects operating income of $2.1 billion to $2.5 billion. The previous expectation was $2 billion to $2.5 billion.

The company continues to expect cash capital expenditures, excluding devices leased through indirect channels, of $3.5 billion to $4 billion.

Conference Call and Webcast

Date/Time: 8:30 a.m. (ET) Tuesday, Aug. 1, 2017

Call-in Information U.S./Canada: 866-360-1063 (ID: 51257921) International: 443-961-0242 (ID: 51257921)

Webcast available at www.sprint.com/investors

Additional information about results is available on our Investor Relations website

1 Rankings based on RootMetrics Metro RootScore Reports from 1H 2016 and 1H 2017 for mobile performance as tested on best available plans and devices on four mobile networks across all available network types. Your experiences may vary. The RootMetrics award is not an endorsement of Sprint. Visit www.rootmetrics.com for more details.

2 Average network reliability (voice & data) based on Sprint’s analysis of latest Nielsen drive test data in the top 106 metro markets.

Quarter To Date 6/30/17 3/31/17 6/30/16Postpaid (39 ) (118 ) 180 Postpaid phone 88 42 173 Prepaid35 195 (306 ) Wholesale and affiliate65 291 728Postpaid31,518 31,576 30,945 Postpaid phone26,153 26,079 25,322 Prepaid8,719 8,688 10,636 Wholesale and affiliate13,461 13,375 11,782Postpaid 1.65 % 1.75 % 1.56 % Postpaid phone 1.50 % 1.58 % 1.39 % Prepaid4.57 % 4.69 % 5.39 %Retail postpaid 2,091 2,001 1,822 Wholesale and affiliate 11,100 10,880 9,244Postpaid $ 47.30 $ 47.34 $ 51.54 Postpaid phone $ 53.92 $ 54.10 $ 59.20 Prepaid$ 38.24 $ 38.48 $ 33.00Quarter To Date 6/30/17 3/31/17 6/30/16Postpaid service revenue $ 4,466 $ 4,493 $ 4,778 Add: Installment plan billings 368 343 264 Add: Lease revenue 899 842 755Average postpaid accounts (in thousands) 11,312 11,405 11,329 Postpaid ABPA*$ 168.95 $ 165.92 $ 170.56 Quarter To Date 6/30/17 3/31/17 6/30/16Postpaid phone service revenue $ 4,214 $ 4,228 $ 4,489 Add: Installment plan billings 332 309 243 Add: Lease revenue 887 829 741Postpaid average phone connections (in thousands) 26,052 26,053 25,275 Postpaid phone ABPU*$ 69.51 $ 68.66 $ 72.17ARPU is calculated by dividing service revenue by the sum of the monthly average number of connections in the applicable service category. Changes in average monthly service revenue reflect connections for either the postpaid or prepaid service category who change rate plans, the level of voice and data usage, the amount of service credits which are offered to connections, plus the net effect of average monthly revenue generated by new connections and deactivating connections. Postpaid phone ARPU represents revenues related to our postpaid phone connections.

(b) Postpaid ABPA* is calculated by dividing service revenue earned from connections plus installment plan billings and lease revenue by the sum of the monthly average number of accounts during the period.

(c) Postpaid phone ABPU* is calculated by dividing postpaid phone service revenue earned from postpaid phone connections plus installment plan billings and lease revenue by the sum of the monthly average number of postpaid phone connections during the period.

(d) As part of the Shentel transaction, 186,000 and 92,000 subscribers were transferred from postpaid and prepaid, respectively, to affiliates. An additional 270,000 of nTelos’ subscribers are now part of our affiliate relationship with Shentel and were reported in wholesale and affiliate subscribers beginning with the quarter ended June 30, 2016. In addition, during the three-month period ended June 30, 2017, 17,000 and 4,000 subscribers were transferred from postpaid and prepaid, respectively, to affiliates as a result of a the transfer of additional subscribers to Shentel.

(e) During the three-month period ended June 30, 2017, 2,000 Wi-Fi connections were adjusted from the postpaid subscriber base.

(f) Sprint is no longer reporting Lifeline subscribers due to recent regulatory changes resulting in tighter program restrictions. We have excluded them from our customer base for all periods presented, including our Assurance Wireless prepaid brand and subscribers through our wholesale MVNO’s.

In the quarter ended June 30, 2017, the Company enhanced subscriber reporting to better align certain early-life gross activations and deactivations. This enhancement had no impact to net additions, but did result in reporting lower gross additions and lower deactivations in the quarter. Without this enhancement, total postpaid churn in the quarter would have been 1.73 percent versus 1.65 percent.Quarter To Date 6/30/17 3/31/17 6/30/163,668 3,471 3,268 Postpaid activations financed 85 % 82 % 69 %

Postpaid activations – leases

55 % 42 % 44 %Installment sales financed $ 553 $ 696 $ 407 Installment billings $ 368 $ 343 $ 264 Installment receivables, net $ 1,792 $ 1,764 $ –Lease revenue $ 899 $ 842 $ 755 Lease depreciation $ 854 $ 911 $ 644Cash paid for capital expenditures – leased devices $ 497 $ 395 $ 405 Transfers from inventory – leased devices $ 850 $ 639 $ 541Leased devices in property, plant and equipment, net $ 4,336 $ 4,162 $ 3,766Leased devices in property, plant and equipment (units in thousands) 12,223 11,888 8,600Proceeds $ 765 $ 100 $ 1,055 Repayments (273 ) (414 ) (240 )Quarter To Date 6/30/17 3/31/17 6/30/16Service revenue $ 6,071 $ 6,116 $ 6,516 Equipment revenue 2,086 2,423 1,496Cost of services (exclusive of depreciation and amortization below) 1,709 1,736 2,099 Cost of products (exclusive of depreciation and amortization below) 1,545 1,980 1,419 Selling, general and administrative 1,938 2,002 1,917 Depreciation – network and other 977 960 1,036 Depreciation – leased devices 854 911 644 Amortization 223 239 287 Other, net (252 ) 241 249 Total net operating expenses 6,994 8,069 7,651Interest expense (613 )