OVERLAND PARK, Kan. (BUSINESS WIRE), January 31, 2017 – Sprint Corporation (NYSE:S) today reported operating results for the third quarter of fiscal year 2016, including more than 5 percent year-over-year growth in net operating revenues and the highest postpaid phone net additions in four years. The company also reported operating income of $311 million and Adjusted EBITDA* of $2.5 billion, both improvements of more than $500 million year-over-year.

“Sprint is turning the corner,” said Sprint CEO Marcelo Claure. “Even with all the aggressive promotional offers from our competitors, we were still able to add more postpaid phone customers than both Verizon and AT&T while continuing to grow revenues, take costs out of the business, and improve the network.”

Highest Postpaid Phone Net Additions in Four Years During Very Competitive Quarter

Sprint’s focus on delivering the best value proposition in wireless resulted in 368,000 postpaid phone net additions in the quarter, its ninth consecutive quarter of year-over-year improvement. Even in a highly competitive quarter with multiple promotional offers from its competitors, Sprint was able to add more postpaid phone customers than both Verizon and AT&T and report its highest postpaid phone net additions in four years. The company also remained postpaid net port positive for the third quarter in a row and had its highest postpaid phone gross additions in four years.

The company also reported the following results:

Total net additions were 577,000 in the quarter, including postpaid net additions of 405,000, prepaid net losses of 501,000, and wholesale and affiliate net additions of 673,000.

Total postpaid churn was 1.67 percent and postpaid phone churn was 1.57 percent in the quarter.

Top Line Growing as Cost Reductions Continue

Sprint made continued progress on growing revenues and improving the cost structure of the business. Total net operating revenues of $8.5 billion grew by $442 million year-over-year, or more than 5 percent, and cost of service and selling, general and administrative expenses declined by nearly $500 million year-over-year, bringing the year-to-date cost reduction to more than $1.6 billion.

As part of its ongoing cost reduction program, the company modified the terms of its vendor agreements associated with the service and repair program on Jan. 1, 2017, which are expected to be accretive to Adjusted EBITDA* by approximately $25 million to $50 million per quarter. Under the terms of the new agreements, the company will now only record the net margin and therefore expects the reduction to wireless service revenues of approximately $200 million per quarter to be more than offset by a greater reduction in cost of service expenses.

The company remains on track to achieve its goal of a sustainable reduction of $2 billion or more of run-rate operating expenses exiting fiscal year 2016 and has plans for further reductions in fiscal year 2017 and beyond.

The company also reported the following financial results:

Net loss of $479 million, or $0.12 per share, in the quarter compared to a net loss of $836 million, or $0.21 per share, in the year-ago period, an improvement of $357 million, or $0.09 per share.

Operating income of $311 million in the quarter compared to an operating loss of $197 million in the year-ago period, an improvement of $508 million.

Adjusted EBITDA* of $2.5 billion in the quarter compared to $1.9 billion in the year-ago period, an increase of approximately $552 million or 29 percent.

Net cash provided by operating activities was $650 million in the quarter compared to $806 million in the year-ago period.

Adjusted free cash flow* was negative $646 million in the quarter compared to positive $339 million in the year-ago period. The prior year quarter included $1.1 billion of proceeds from the first sale-leaseback transaction with Mobile Leasing Solutions, LLC (MLS), while this quarter included a cash outflow of approximately $370 million related to the repurchase of the devices sold in the first MLS transaction.

Improved Operating Performance and Liquidity Position Bolsters Credit Rating

During the quarter the company issued $3.5 billion of spectrum-backed senior secured notes at 3.36 percent, which is about half of Sprint’s current effective interest rate, as part of a $7 billion program aimed at diversifying the company’s funding sources, lowering its cost of capital, and reducing future cash interest expenses. The company also retired $2.3 billion of debt maturities with significantly higher coupon payments and repurchased the devices sold in the first MLS transaction, thus eliminating the associated future lease obligation.

Total liquidity was $9.1 billion at the end of the quarter, including $6.1 billion of cash, cash equivalents and short-term investments. Additionally, the company also has $1.2 billion of availability under vendor financing agreements that can be used toward the purchase of 2.5GHz network equipment.

Based on the company’s sustained operational performance and improved liquidity, Moody’s Investor Service recently upgraded Sprint’s corporate family rating from B3 to B2.

In addition, the company is in the process of refinancing its $3.3 billion unsecured revolving credit facility and expects to complete that process in the coming weeks.

Network Improvements Expected to Continue with High Performance User Equipment (HPUE)

Sprint continues to unlock the value of the largest spectrum holdings in the U.S. by densifying and optimizing its network to provide customers the best experience. Third party sources continue to validate the company’s network performance improvements.

Independent mobile analytics firm RootMetrics ® awarded Sprint a company record 246 first-place (outright or shared) Metropolitan area RootScore ® awards for reliability, speed, data, call, text, or overall network performance in the second half of 2016, including more call RootScore awards than Verizon, AT&T, or T-Mobile for the first time ever. Additionally, Sprint has received nearly 50 percent more total awards compared to its award tally in the prior testing period. 1

awarded Sprint a company record 246 first-place (outright or shared) Metropolitan area RootScore awards for reliability, speed, data, call, text, or overall network performance in the second half of 2016, including more call RootScore awards than Verizon, AT&T, or T-Mobile for the first time ever. Additionally, Sprint has received nearly 50 percent more total awards compared to its award tally in the prior testing period. Sprint’s overall network reliability continues to beat T-Mobile and performs within 1 percent of Verizon and AT&T, based on an analysis of Nielsen data.2

The Sprint LTE Plus network, which includes advanced technologies such as antenna beamforming and two-channel carrier aggregation, is now available in more than 250 markets, with three-channel carrier aggregation deployed in more than 100 of those markets.

Sprint also recently announced a breakthrough innovation called HPUE, a new technology that can extend the coverage of its 2.5GHz spectrum by up to 30 percent to nearly match its mid-band 1.9GHz spectrum performance on capable devices, including indoors where the majority of wireless traffic is generated. HPUE-capable devices are expected to be available in the coming months.

Fiscal Year 2016 Outlook

The company now expects Adjusted EBITDA* of $9.7 billion to $10 billion, at the high end of its previous expectation of $9.5 billion to $10 billion.

The company now expects operating income of $1.4 billion to $1.7 billion, at the high end of its previous expectation of $1.2 billion to $1.7 billion.

The company now expects cash capital expenditures, excluding devices leased through indirect channels, of $2 billion to $2.3 billion. The company’s previous expectation was less than $3 billion.

The company continues to expect Adjusted free cash flow* around break-even.

Conference Call and Webcast

Date/Time: 8:30 a.m. (ET) Tuesday, Jan. 31, 2017

Call-in Information U.S./Canada: 866-360-1063 (ID: 47845527) International: 443-961-0242 (ID: 47845527)

Webcast available at www.sprint.com/investors

Additional information about results is available on our Investor Relations website

1 Rankings based on RootMetrics 125 Metro RootScore Reports (1H and 2H 2016) for mobile performance as tested on best available plans and devices on 4 mobile networks across all available network types. Your experience may vary. The RootMetrics awards are not an endorsement of Sprint. Visit www.rootmetrics.com.

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 Year To Date 12/31/16 9/30/16 12/31/15 12/31/16 12/31/15Postpaid 405 344 501 929 1,189 Prepaid (501 ) (427 ) (491 ) (1,259 ) (1,045 ) Wholesale and affiliate 673 823 481 2,024 2,078Postpaid31,694 31,289 30,895 31,694 30,895 Prepaid11,812 13,547 14,661 11,812 14,661 Wholesale and affiliate16,009 15,357 12,803 16,009 12,803Postpaid 1.67 % 1.52 % 1.62 % 1.58 % 1.57 % Prepaid5.80 % 5.63 % 5.82 % 5.66 % 5.31 %Retail postpaid 1,960 1,874 1,676 1,960 1,676 Wholesale and affiliate 10,594 9,951 7,930 10,594 7,930Postpaid $ 49.70 $ 50.54 $ 52.48 $ 50.59 $ 53.97 Prepaid$ 27.61 $ 27.31 $ 27.44 $ 27.41 $ 27.64Postpaid phone net additions 368 347 366 888 416 Postpaid phone end of period connections26,037 25,669 25,294 26,037 25,294 Postpaid phone churn 1.57 % 1.37 % 1.53 % 1.44 % 1.50 %Quarter To Date Year To Date 12/31/16 9/30/16 12/31/15 12/31/16 12/31/15Postpaid service revenue $ 4,686 $ 4,720 $ 4,813 $ 14,184 $ 14,670 Add: Installment plan billings 291 274 300 829 903 Add: Lease revenue 887 811 531 2,453 1,176Sprint platform postpaid accounts (in thousands) 11,413 11,363 11,261 11,368 11,211 Sprint platform postpaid ABPA*$ 171.28 $ 170.29 $ 167.11 $ 170.71 $ 166.00 Quarter To Date Year To Date 12/31/16 9/30/16 12/31/15 12/31/16 12/31/15Postpaid phone service revenue $ 4,420 $ 4,441 $ 4,529 $ 13,350 $ 13,819 Add: Installment plan billings 261 248 280 752 848 Add: Lease revenue 873 797 522 2,411 1,150Sprint platform postpaid average phone connections (in thousands) 25,795 25,514 25,040 25,528 24,927 Sprint platform postpaid phone ARPU$ 57.12 $ 58.03 $ 60.30 $ 58.11 $ 61.60 Sprint platform postpaid phone ABPU*$ 71.77 $ 71.69 $ 70.99 $ 71.87 $ 70.51ARPU 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. Sprint platform postpaid phone ARPU represents revenues related to our postpaid phone connections. (b) Sprint platform 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) Sprint platform 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 transaction involving Shenandoah Telecommunications Company (Shentel), 186,000 and 92,000 subscribers were transferred in May 2016 from postpaid and prepaid, respectively, to affiliates. An additional 270,000 nTelos’ subscribers are now part of our affiliate relationship with Shentel and are being reported in wholesale and affiliate subscribers during the quarter ended June 30, 2016. (e) As a result of aligning all prepaid brands, including prepaid affiliate subscribers, under one churn and retention program as of December 31, 2016, end of period prepaid and affiliate subscribers were reduced by 1,234,000 and 21,000, respectively.Quarter To Date Year To Date 12/31/16 9/30/16 12/31/15 12/31/16 12/31/154,812 3,747 4,799 11,827 12,956Subsidy/other 20 % 27 % 35 % 25 % 35 % Installment plans 37 % 34 % 10 % 33 %