OVERLAND PARK, Kan. (BUSINESS WIRE), August 04, 2015 – Sprint Corporation (NYSE:S) today reported operating results for the first fiscal quarter of 2015, including record low Sprint platform postpaid churn of 1.56 percent, total net additions of 675,000, and for the fifth consecutive quarter, reduced postpaid phone losses to reach phone net additions in May and June. In addition, the company reported net operating revenue of $8 billion, operating income of $501 million and Adjusted EBITDA* of $2.1 billion, and is raising its fiscal year 2015 Adjusted EBITDA* outlook from the previous expectation of $6.5 to $6.9 billion to $7.2 to $7.6 billion, excluding any accounting impacts from potential lease financing.

“Over the past year, Sprint has made meaningful progress in our turnaround by improving our network performance and enhancing our overall value proposition,” said Sprint CEO Marcelo Claure. “As a result, we hit significant milestones during the quarter by posting the company’s lowest-ever churn and recording postpaid phone net additions in both May and June, as well as for a third consecutive month in July. Going forward, we are confident in our plan to leverage our unique spectrum assets to make our network a competitive advantage, aggressively reduce operating costs, and utilize our business relationships and assets to fund our turnaround.”

Record Sprint Platform Postpaid Churn Highlights Continued Improvement in Customer Metrics

Sprint is improving the customer experience with better network performance and a compelling value proposition, including simple offers such as its industry-first leasing program and the recently introduced All-In Wireless plans. The company made significant progress on retaining more of its valuable postpaid customers, including a record low Sprint platform postpaid churn rate of 1.56 percent – a 49 basis point improvement year-over-year. Additionally, the company saw strong improvement in the more profitable phone customers. These trends contributed to improvement in several Sprint platform postpaid customer metrics.

Postpaid net additions of 310,000 compared to net losses of 181,000 in the prior year quarter – an improvement of 491,000 year-over-year.

Postpaid phone losses were 12,000, but for the first time in nearly two years Sprint recorded monthly postpaid phone net additions in both May and June. This marked the fifth consecutive quarter of sequential improvement and compared to losses of 620,000 in the prior year quarter. The 608,000 year-over-year improvement was driven by lower churn and a 13 percent increase in gross additions, including a 47 percent increase in gross additions with prime credit quality.

Net port positive for the second consecutive quarter.

The company also reported the following Sprint platform results:

Total net additions of 675,000 compared to net losses of 220,000 in the prior year quarter. The 895,000 year-over-year improvement was mostly driven by fewer postpaid phone customer losses.

Prepaid net losses of 366,000 compared to net losses of 542,000 in the prior year quarter. The 176,000 year-over-year improvement was mostly due to fewer customer losses in the Assurance brand.

Wholesale net additions of 731,000 compared to 503,000 in the prior year quarter. The year-over-year growth was mostly driven by connected devices.

RootScore® Awards Demonstrate Continued Progress on Network Performance; Next Evolution Underway

Sprint remained focused on building a network that delivers the consistent reliability, capacity and speed that customers demand and its progress continues to be recognized. Independent mobile analytics firm RootMetrics demonstrated the company’s network improvements by awarding Sprint a total of 180 first place (outright or shared) RootScore Awards for overall, reliability, speed, data, call, or text network performance in 125 markets measured in the first half of 2015 compared to only 27 awards in the year-ago periodi.

More recently, the company announced the availability of carrier aggregation, which produces more capacity and is expected to double data speeds, addressing a key area for improvement. The company is rolling out two-channel (2×20 MHz) carrier aggregation, a feature of LTE-Advanced that combines bands of spectrum to create wider channels in the 2.5 GHz band, on select sites within various markets across the country. In addition, Sprint is one of the first operators to roll out carrier aggregation with antenna beamforming, which significantly improves customers’ experience at the cell edge. Tests by independent third parties have confirmed the performance improvements of these actions.

Sprint has made significant progress on network performance and has started the next evolution of the network. This will involve significant densification of the network including additional macro cell sites, deployment of tens of thousands of small cells, and further expansion of the 2.5 GHz spectrum across the company’s existing sites.

Closing the Gap on Distribution

To build on its recent momentum and increase customer acquisition in the future, Sprint took several actions to expand its retail distribution and close the gap with its competitors. Sprint’s total retail footprint now includes approximately 4,500 locations in the U.S.

Sprint-RadioShack Stores – All 1,435 co-branded stores are open and staffed with Sprint employees. The fully operational “store-within-a-store” retail model has been completed in about one quarter of the locations with the remaining expected to be complete by the end of calendar year 2015.

– All 1,435 co-branded stores are open and staffed with Sprint employees. The fully operational “store-within-a-store” retail model has been completed in about one quarter of the locations with the remaining expected to be complete by the end of calendar year 2015. Sprint ® Direct 2 You – This one-of-a-kind service, which features a Sprint expert helping customers set up a mobile device at any location the customer chooses for free, has expanded to several new major metropolitan areas across the country. The service is now available in Chicago, Dallas, Denver, Kansas City, Los Angeles, Miami, New York, San Francisco, Tampa, Washington, D.C. and surrounding areas.

– This one-of-a-kind service, which features a Sprint expert helping customers set up a mobile device at any location the customer chooses for free, has expanded to several new major metropolitan areas across the country. The service is now available in Chicago, Dallas, Denver, Kansas City, Los Angeles, Miami, New York, San Francisco, Tampa, Washington, D.C. and surrounding areas. Dixon’s Carphone – Sprint entered into a commercial relationship with Dixon’s Carphone, a premier European consumer electronics retailer renowned for innovation in wireless retail sales, to build and operate approximately 20 new Sprint stores in select U.S. markets with potential for significant expansion.

Quarterly Financial Results

Net operating revenues of $8 billion decreased nine percent year-over-year, as customer shifts to rate plans associated with device financing options and postpaid phone customer losses drove lower wireless service revenues, and equipment revenues were impacted due to a shift from installment billing sales, which recognize more revenue at the point of sale, to leasing sales, which recognize revenues over time.

Consolidated Adjusted EBITDA* of $2.1 billion grew 14 percent from the prior year period, as expense reductions more than offset the decline in operating revenues. In spite of additional costs related to higher retail sales volumes, total expenses improved primarily due to lower cost of product expenses related to the introduction of device leasing options for which the associated cost is recorded as depreciation expense over the term of the lease, lower cost of service expenses on the wireline network, and lower wireless bad debt expense as a result of a higher mix of prime credit quality customers.

Operating income of $501 million was relatively flat from $519 million in the year-ago quarter as higher depreciation expenses offset the growth in Adjusted EBITDA*.

Net loss of $20 million, or loss per share of $.01, compared to a net income of $23 million, or earnings per share of $.01, in the year-ago period primarily due to higher interest expenses.

Total liquidity was $6.6 billion at the end of the quarter and the company had an additional $1.3 billion of availability under vendor financing agreements that can be utilized toward the purchase of 2.5 GHz network equipment. Sprint has been working with Softbank and other partners in setting up a leasing company that will finance its devices leased by customers on attractive terms. These arrangements are expected to be finalized in the coming months, and Softbank is expected to be a minority equity investor in the leasing company. With additional expected expense reductions, a capital efficient deployment of the network, and funding from the proposed leasing company, Sprint currently does not expect to raise additional capital through the public debt or equity markets in the foreseeable future, nor does it currently expect to sell spectrum.

Financial Outlook

As a result of improved customer trends, a greater reduction in operating expenses, and a higher mix of sales on device financing options, the company is raising its outlook for fiscal year 2015 Adjusted EBITDA* from its previous expectation of $6.5 to $6.9 billion to a range of $7.2 and $7.6 billion, excluding any accounting impacts from the potential lease financing.

The company expects fiscal year 2015 cash capital expenditures to be approximately $5 billion, excluding the impact of leased devices sold through indirect channels. This compares to the previous expectation of accrued capital expenditures of approximately $5 billion.

Conference Call and Webcast

Date/Time: 8:30 a.m. (ET) Tuesday, Aug. 4, 2015

Call-in Information U.S./Canada: 866-360-1063 (ID: 79004041) International: 706-634-7849 (ID: 79004041)

Webcast available via the Internet at www.sprint.com/investors

Additional information about results, including the “Quarterly Investor Update,” is available on our Investor Relations website

Contact Information

Media Contact: Scott Sloat, 240-855-0164, scott.sloat@sprint.com

Investor Contact: Jud Henry, 800-259-3755, investor.relations@sprint.com

Quarter To Date 6/30/15 3/31/15 6/30/14Postpaid 310 211 (181 ) Prepaid (366 ) 546 (542 ) Wholesale and affiliate 731 492 503Postpaid 30,016 29,706 29,737 Prepaid 15,340 15,706 14,715 Wholesale and affiliate 11,456 10,725 8,879Postpaid 1.56 % 1.84 % 2.05 % Prepaid 5.08 % 3.84 % 4.44 %Retail postpaid 1,439 1,320 988 Wholesale and affiliate 6,620 5,832 4,192Sprint platform 56,812 56,137 53,331 Transactions856 1,004 1,222Postpaid $ 55.48 $ 56.94 $ 62.07 Prepaid $ 27.81 $ 27.50 $ 27.38Quarter To Date 6/30/15 3/31/15 6/30/14Sprint platform postpaid service revenue $ 4,964 $ 5,049 $ 5,553 Add: Installment plan billings and lease revenue 554 423 137 Total for Sprint platform postpaid connections $ 5,518 $ 5,472 $ 5,690 Sprint platform postpaid ABPU* $ 61.67 $ 61.71 $ 63.59 Sprint platform postpaid accounts (in thousands) 11,175 11,199 11,753 Sprint platform postpaid ABPA* $ 164.63 $ 162.89 $ 161.35ARPU 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. (b) Sprint platform postpaid ABPU* is calculated by dividing service revenue earned from customers plus installment plan billings and lease revenue by the sum of the monthly average number of connections during the period. (c) Sprint platform postpaid ABPA* is calculated by dividing service revenue earned from customers plus installment plan billings and lease revenue by the sum of the monthly average number of accounts during the period.Quarter To Date 6/30/15 3/31/15 6/30/14Service revenue $ 7,037 $ 7,138 $ 7,683 Equipment revenue 990 1,144 1,106Cost of services (exclusive of depreciation and amortization below) 2,393 2,381 2,520 Cost of products (exclusive of depreciation and amortization below) 1,365 1,827 2,158 Selling, general and administrative 2,187 2,331 2,284 Depreciation and amortization 1,588 1,454 1,281 Other, net (7 ) (29 ) 27 Total net operating expenses 7,526 7,964 8,270Interest expense (542 ) (523 ) (512 ) Equity in earnings of unconsolidated investments and other, net 4 8 1Income tax benefit (expense) 17 (27 ) 15Basic Weighted Average Common Shares outstanding 3,967 3,962 3,945 Diluted Weighted Average Common Shares outstanding 3,967 3,962 4,002Quarter To Date 6/30/15 3/31/15 6/30/14Income tax (benefit) expense (17 ) 27 (15 )Equity in earnings of unconsolidated investments and other, net (4 ) (8 ) (1 ) Interest expense 542 523 512Depreciation and amortization 1,588 1,454 1,281Severance and exit costs13 (29 ) 27 Reduction in liability – U.S. Cellular asset acquisition(20 ) – –