[January 31, 2017] |
|
Sprint Continues Year-over-Year Growth in Net Operating Revenues and Postpaid Phone Net Additions with Third Quarter of Fiscal Year 2016 Results
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
-
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.
Wireless Operating Statistics (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
|
Year To Date
|
|
|
|
12/31/16
|
|
|
9/30/16
|
|
|
12/31/15
|
|
|
12/31/16
|
|
|
12/31/15
|
Sprint platform (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net additions (losses) (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid
|
|
|
|
405
|
|
|
|
|
344
|
|
|
|
|
501
|
|
|
|
|
929
|
|
|
|
|
1,189
|
|
Prepaid
|
|
|
|
(501
|
)
|
|
|
|
(427
|
)
|
|
|
|
(491
|
)
|
|
|
|
(1,259
|
)
|
|
|
|
(1,045
|
)
|
Wholesale and affiliate
|
|
|
|
673
|
|
|
|
|
823
|
|
|
|
|
481
|
|
|
|
|
2,024
|
|
|
|
|
2,078
|
|
Total Sprint platform wireless net additions
|
|
|
|
577
|
|
|
|
|
740
|
|
|
|
|
491
|
|
|
|
|
1,694
|
|
|
|
|
2,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period connections (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid (d)
|
|
|
|
31,694
|
|
|
|
|
31,289
|
|
|
|
|
30,895
|
|
|
|
|
31,694
|
|
|
|
|
30,895
|
|
Prepaid (d) (e)
|
|
|
|
11,812
|
|
|
|
|
13,547
|
|
|
|
|
14,661
|
|
|
|
|
11,812
|
|
|
|
|
14,661
|
|
Wholesale and affiliate (d) (e)
|
|
|
|
16,009
|
|
|
|
|
15,357
|
|
|
|
|
12,803
|
|
|
|
|
16,009
|
|
|
|
|
12,803
|
|
Total Sprint platform end of period connections
|
|
|
|
59,515
|
|
|
|
|
60,193
|
|
|
|
|
58,359
|
|
|
|
|
59,515
|
|
|
|
|
58,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Churn
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid
|
|
|
|
1.67
|
%
|
|
|
|
1.52
|
%
|
|
|
|
1.62
|
%
|
|
|
|
1.58
|
%
|
|
|
|
1.57
|
%
|
Prepaid (e)
|
|
|
|
5.80
|
%
|
|
|
|
5.63
|
%
|
|
|
|
5.82
|
%
|
|
|
|
5.66
|
%
|
|
|
|
5.31
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental data - connected devices
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period connections (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail postpaid
|
|
|
|
1,960
|
|
|
|
|
1,874
|
|
|
|
|
1,676
|
|
|
|
|
1,960
|
|
|
|
|
1,676
|
|
Wholesale and affiliate
|
|
|
|
10,594
|
|
|
|
|
9,951
|
|
|
|
|
7,930
|
|
|
|
|
10,594
|
|
|
|
|
7,930
|
|
Total
|
|
|
|
12,554
|
|
|
|
|
11,825
|
|
|
|
|
9,606
|
|
|
|
|
12,554
|
|
|
|
|
9,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sprint platform ARPU (1) (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid
|
|
|
$
|
49.70
|
|
|
|
$
|
50.54
|
|
|
|
$
|
52.48
|
|
|
|
$
|
50.59
|
|
|
|
$
|
53.97
|
|
Prepaid (e)
|
|
|
$
|
27.61
|
|
|
|
$
|
27.31
|
|
|
|
$
|
27.44
|
|
|
|
$
|
27.41
|
|
|
|
$
|
27.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sprint platform postpaid phone
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid phone net additions
|
|
|
|
368
|
|
|
|
|
347
|
|
|
|
|
366
|
|
|
|
|
888
|
|
|
|
|
416
|
|
Postpaid phone end of period connections (d)
|
|
|
|
26,037
|
|
|
|
|
25,669
|
|
|
|
|
25,294
|
|
|
|
|
26,037
|
|
|
|
|
25,294
|
|
Postpaid phone churn
|
|
|
|
1.57
|
%
|
|
|
|
1.37
|
%
|
|
|
|
1.53
|
%
|
|
|
|
1.44
|
%
|
|
|
|
1.50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP RECONCILIATION - ABPA*, POSTPAID PHONE ARPU AND ABPU*
(Unaudited)
|
|
|
|
|
(Millions, except accounts, connections, ABPA*, ARPU, and ABPU*)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
|
Year To Date
|
|
|
|
12/31/16
|
|
|
9/30/16
|
|
|
12/31/15
|
|
|
12/31/16
|
|
|
12/31/15
|
Sprint platform ABPA* (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid 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
|
|
|
|
1,176
|
Total for Sprint platform postpaid connections
|
|
|
$
|
5,864
|
|
|
$
|
5,805
|
|
|
$
|
5,644
|
|
|
$
|
17,466
|
|
|
$
|
16,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sprint platform postpaid accounts (in thousands)
|
|
|
|
11,413
|
|
|
|
11,363
|
|
|
|
11,261
|
|
|
|
11,368
|
|
|
|
11,211
|
Sprint platform postpaid ABPA* (b)
|
|
|
$
|
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
|
|
|
12/31/15
|
Sprint platform postpaid phone ARPU and
ABPU* (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid 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
|
|
|
|
1,150
|
Total for Sprint platform postpaid phone connections
|
|
|
$
|
5,554
|
|
|
$
|
5,486
|
|
|
$
|
5,331
|
|
|
$
|
16,513
|
|
|
$
|
15,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sprint platform postpaid average phone connections (in thousands)
|
|
|
|
25,795
|
|
|
|
25,514
|
|
|
|
25,040
|
|
|
|
25,528
|
|
|
|
24,927
|
Sprint platform postpaid phone ARPU (a)
|
|
|
$
|
57.12
|
|
|
$
|
58.03
|
|
|
$
|
60.30
|
|
|
$
|
58.11
|
|
|
$
|
61.60
|
Sprint platform postpaid phone ABPU* (c)
|
|
|
$
|
71.77
|
|
|
$
|
71.69
|
|
|
$
|
70.99
|
|
|
$
|
71.87
|
|
|
$
|
70.51
|
(a) ARPU 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.
|
|
Wireless Device Financing Summary (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Millions, except sales, connections, and sales and connections
mix)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
|
Year To Date
|
|
|
|
|
12/31/16
|
|
|
9/30/16
|
|
|
12/31/15
|
|
|
12/31/16
|
|
|
12/31/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid sales (in thousands)
|
|
|
|
|
4,812
|
|
|
|
|
3,747
|
|
|
|
|
4,799
|
|
|
|
|
11,827
|
|
|
|
|
12,956
|
|
Postpaid sales mix
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsidy/other
|
|
|
|
|
20
|
%
|
|
|
|
27
|
%
|
|
|
|
35
|
%
|
|
|
|
25
|
%
|
|
|
|
35
|
%
|
Installment plans
|
|
|
|
|
37
|
%
|
|
|
|
34
|
%
|
|
|
|
10
|
%
|
|
|
|
33
|
%
|
|
|
|
12
|
%
|
Leasing
|
|
|
|
|
43
|
%
|
|
|
|
39
|
%
|
|
|
|
55
|
%
|
|
|
|
42
|
%
|
|
|
|
53
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Installment plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Installment sales financed
|
|
|
|
$
|
1,036
|
|
|
|
$
|
745
|
|
|
|
$
|
251
|
|
|
|
$
|
2,188
|
|
|
|
$
|
748
|
|
Installment billings
|
|
|
|
|
291
|
|
|
|
|
274
|
|
|
|
|
300
|
|
|
|
|
829
|
|
|
|
|
903
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease revenue
|
|
|
|
$
|
887
|
|
|
|
$
|
811
|
|
|
|
$
|
531
|
|
|
|
$
|
2,453
|
|
|
|
$
|
1,176
|
|
Lease depreciation
|
|
|
|
|
837
|
|
|
|
|
724
|
|
|
|
|
535
|
|
|
|
|
2,205
|
|
|
|
|
1,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leased device additions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for capital expenditures - leased devices
|
|
|
|
$
|
767
|
|
|
|
$
|
358
|
|
|
|
$
|
607
|
|
|
|
$
|
1,530
|
|
|
|
$
|
1,724
|
|
Transfers from inventory - leased devices
|
|
|
|
|
1,095
|
|
|
|
|
645
|
|
|
|
|
1,073
|
|
|
|
|
2,281
|
|
|
|
|
2,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leased devices in property, plant and equipment, net
|
|
|
|
$
|
4,454
|
|
|
|
$
|
3,759
|
|
|
|
$
|
3,321
|
|
|
|
$
|
4,454
|
|
|
|
$
|
3,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leased device net proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from MLS sale
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
1,136
|
|
|
|
$
|
1,055
|
|
|
|
$
|
1,136
|
|
Repayments to MLS
|
|
|
|
|
(176
|
)
|
|
|
|
(161
|
)
|
|
|
|
-
|
|
|
|
|
(502
|
)
|
|
|
|
-
|
|
Proceeds from lease securitization
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Repayments of lease securitization
|
|
|
|
|
(55
|
)
|
|
|
|
(23
|
)
|
|
|
|
-
|
|
|
|
|
(153
|
)
|
|
|
|
-
|
|
Net (repayments) proceeds of device financings and sales of
future lease receivables
|
|
|
|
$
|
(231
|
)
|
|
|
$
|
(184
|
)
|
|
|
$
|
1,136
|
|
|
|
$
|
400
|
|
|
|
$
|
1,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
|
|
|
|
|
|
|
|
|
(Millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
|
Year To Date
|
|
|
|
|
12/31/16
|
|
|
9/30/16
|
|
|
12/31/15
|
|
|
12/31/16
|
|
|
12/31/15
|
Net operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue
|
|
|
|
$
|
6,323
|
|
|
|
$
|
6,413
|
|
|
|
$
|
6,683
|
|
|
|
$
|
19,252
|
|
|
|
$
|
20,600
|
|
Equipment revenue
|
|
|
|
|
2,226
|
|
|
|
|
1,834
|
|
|
|
|
1,424
|
|
|
|
|
5,556
|
|
|
|
|
3,509
|
|
Total net operating revenues
|
|
|
|
|
8,549
|
|
|
|
|
8,247
|
|
|
|
|
8,107
|
|
|
|
|
24,808
|
|
|
|
|
24,109
|
|
Net operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services (exclusive of depreciation and amortization below)
|
|
|
|
|
1,925
|
|
|
|
|
2,101
|
|
|
|
|
2,348
|
|
|
|
|
6,125
|
|
|
|
|
7,194
|
|
Cost of products (exclusive of depreciation and amortization below)
|
|
|
|
|
1,985
|
|
|
|
|
1,693
|
|
|
|
|
1,589
|
|
|
|
|
5,097
|
|
|
|
|
4,244
|
|
Selling, general and administrative
|
|
|
|
|
2,080
|
|
|
|
|
1,995
|
|
|
|
|
2,129
|
|
|
|
|
5,992
|
|
|
|
|
6,540
|
|
Depreciation - network and other
|
|
|
|
|
1,000
|
|
|
|
|
986
|
|
|
|
|
1,014
|
|
|
|
|
3,022
|
|
|
|
|
2,971
|
|
Depreciation - leased devices
|
|
|
|
|
837
|
|
|
|
|
724
|
|
|
|
|
535
|
|
|
|
|
2,205
|
|
|
|
|
1,231
|
|
Amortization
|
|
|
|
|
255
|
|
|
|
|
271
|
|
|
|
|
316
|
|
|
|
|
813
|
|
|
|
|
994
|
|
Other, net
|
|
|
|
|
156
|
|
|
|
|
(145
|
)
|
|
|
|
373
|
|
|
|
|
260
|
|
|
|
|
633
|
|
Total net operating expenses
|
|
|
|
|
8,238
|
|
|
|
|
7,625
|
|
|
|
|
8,304
|
|
|
|
|
23,514
|
|
|
|
|
23,807
|
|
Operating income (loss)
|
|
|
|
|
311
|
|
|
|
|
622
|
|
|
|
|
(197
|
)
|
|
|
|
1,294
|
|
|
|
|
302
|
|
Interest expense
|
|
|
|
|
(619
|
)
|
|
|
|
(630
|
)
|
|
|
|
(546
|
)
|
|
|
|
(1,864
|
)
|
|
|
|
(1,630
|
)
|
Other (expense) income, net
|
|
|
|
|
(60
|
)
|
|
|
|
(15
|
)
|
|
|
|
4
|
|
|
|
|
(67
|
)
|
|
|
|
13
|
|
Loss before income taxes
|
|
|
|
|
(368
|
)
|
|
|
|
(23
|
)
|
|
|
|
(739
|
)
|
|
|
|
(637
|
)
|
|
|
|
(1,315
|
)
|
Income tax expense
|
|
|
|
|
(111
|
)
|
|
|
|
(119
|
)
|
|
|
|
(97
|
)
|
|
|
|
(286
|
)
|
|
|
|
(126
|
)
|
Net loss
|
|
|
|
$
|
(479
|
)
|
|
|
$
|
(142
|
)
|
|
|
$
|
(836
|
)
|
|
|
$
|
(923
|
)
|
|
|
$
|
(1,441
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
|
|
$
|
(0.12
|
)
|
|
|
$
|
(0.04
|
)
|
|
|
$
|
(0.21
|
)
|
|
|
$
|
(0.23
|
)
|
|
|
$
|
(0.36
|
)
|
Weighted average common shares outstanding
|
|
|
|
|
3,983
|
|
|
|
|
3,979
|
|
|
|
|
3,970
|
|
|
|
|
3,979
|
|
|
|
|
3,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
|
|
-30.2
|
%
|
|
|
|
-517.4
|
%
|
|
|
|
-13.1
|
%
|
|
|
|
-44.9
|
%
|
|
|
|
-9.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP RECONCILIATION - NET LOSS TO ADJUSTED EBITDA* (Unaudited)
|
|
|
|
|
|
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
|
Year To Date
|
|
|
|
|
12/31/16
|
|
|
9/30/16
|
|
|
12/31/15
|
|
|
12/31/16
|
|
|
12/31/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$
|
(479
|
)
|
|
|
$
|
(142
|
)
|
|
|
$
|
(836
|
)
|
|
|
$
|
(923
|
)
|
|
|
$
|
(1,441
|
)
|
Income tax expense
|
|
|
|
|
111
|
|
|
|
|
119
|
|
|
|
|
97
|
|
|
|
|
286
|
|
|
|
|
126
|
|
Loss before income taxes
|
|
|
|
|
(368
|
)
|
|
|
|
(23
|
)
|
|
|
|
(739
|
)
|
|
|
|
(637
|
)
|
|
|
|
(1,315
|
)
|
Other expense (income), net
|
|
|
|
|
60
|
|
|
|
|
15
|
|
|
|
|
(4
|
)
|
|
|
|
67
|
|
|
|
|
(13
|
)
|
Interest expense
|
|
|
|
|
619
|
|
|
|
|
630
|
|
|
|
|
546
|
|
|
|
|
1,864
|
|
|
|
|
1,630
|
|
Operating income (loss)
|
|
|
|
|
311
|
|
|
|
|
622
|
|
|
|
|
(197
|
)
|
|
|
|
1,294
|
|
|
|
|
302
|
|
Depreciation - network and other
|
|
|
|
|
1,000
|
|
|
|
|
986
|
|
|
|
|
1,014
|
|
|
|
|
3,022
|
|
|
|
|
2,971
|
|
Depreciation - leased devices
|
|
|
|
|
837
|
|
|
|
|
724
|
|
|
|
|
535
|
|
|
|
|
2,205
|
|
|
|
|
1,231
|
|
Amortization
|
|
|
|
|
255
|
|
|
|
|
271
|
|
|
|
|
316
|
|
|
|
|
813
|
|
|
|
|
994
|
|
EBITDA* (3)
|
|
|
|
|
2,403
|
|
|
|
|
2,603
|
|
|
|
|
1,668
|
|
|
|
|
7,334
|
|
|
|
|
5,498
|
|
Loss (gain) from asset dispositions and exchanges, net (4)
|
|
|
|
|
28
|
|
|
|
|
(354
|
)
|
|
|
|
-
|
|
|
|
|
(326
|
)
|
|
|
|
85
|
|
Severance and exit costs (5)
|
|
|
|
|
19
|
|
|
|
|
(5
|
)
|
|
|
|
209
|
|
|
|
|
30
|
|
|
|
|
247
|
|
Contract terminations (6)
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
113
|
|
|
|
|
-
|
|
Litigation and other contingencies (7)
|
|
|
|
|
-
|
|
|
|
|
103
|
|
|
|
|
21
|
|
|
|
|
103
|
|
|
|
|
178
|
|
Reduction in liability - U.S. Cellular asset acquisition (8)
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(20
|
)
|
Adjusted EBITDA* (3)
|
|
|
|
$
|
2,450
|
|
|
|
$
|
2,347
|
|
|
|
$
|
1,898
|
|
|
|
$
|
7,254
|
|
|
|
$
|
5,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin*
|
|
|
|
|
38.7
|
%
|
|
|
|
36.6
|
%
|
|
|
|
28.4
|
%
|
|
|
|
37.7
|
%
|
|
|
|
29.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for capital expenditures - network and other
|
|
|
|
$
|
478
|
|
|
|
$
|
470
|
|
|
|
$
|
994
|
|
|
|
$
|
1,421
|
|
|
|
$
|
3,958
|
|
Cash paid for capital expenditures - leased devices
|
|
|
|
$
|
767
|
|
|
|
$
|
358
|
|
|
|
$
|
607
|
|
|
|
$
|
1,530
|
|
|
|
$
|
1,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WIRELESS STATEMENTS OF OPERATIONS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
|
Year To Date
|
|
|
|
|
12/31/16
|
|
|
9/30/16
|
|
|
12/31/15
|
|
|
12/31/16
|
|
|
12/31/15
|
Net operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sprint platform (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid
|
|
|
|
$
|
4,686
|
|
|
$
|
4,720
|
|
|
|
$
|
4,813
|
|
|
|
$
|
14,184
|
|
|
$
|
14,670
|
Prepaid
|
|
|
|
|
1,077
|
|
|
|
1,129
|
|
|
|
|
1,224
|
|
|
|
|
3,371
|
|
|
|
3,783
|
Wholesale, affiliate and other
|
|
|
|
|
183
|
|
|
|
168
|
|
|
|
|
182
|
|
|
|
|
509
|
|
|
|
548
|
Total Sprint platform
|
|
|
|
|
5,946
|
|
|
|
6,017
|
|
|
|
|
6,219
|
|
|
|
|
18,064
|
|
|
|
19,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total transactions (2)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
27
|
|
|
|
|
-
|
|
|
|
216
|
Total service revenue
|
|
|
|
|
5,946
|
|
|
|
6,017
|
|
|
|
|
6,246
|
|
|
|
|
18,064
|
|
|
|
19,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment revenue
|
|
|
|
|
2,226
|
|
|
|
1,834
|
|
|
|
|
1,424
|
|
|
|
|
5,556
|
|
|
|
3,509
|
Total net operating revenues
|
|
|
|
|
8,172
|
|
|
|
7,851
|
|
|
|
|
7,670
|
|
|
|
|
23,620
|
|
|
|
22,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services (exclusive of depreciation and amortization below)
|
|
|
|
|
1,649
|
|
|
|
1,793
|
|
|
|
|
2,031
|
|
|
|
|
5,226
|
|
|
|
6,147
|
Cost of products (exclusive of depreciation and amortization below)
|
|
|
|
|
1,985
|
|
|
|
1,693
|
|
|
|
|
1,589
|
|
|
|
|
5,097
|
|
|
|
4,244
|
Selling, general and administrative
|
|
|
|
|
2,032
|
|
|
|
1,931
|
|
|
|
|
2,041
|
|
|
|
|
5,797
|
|
|
|
6,273
|
Depreciation - network and other
|
|
|
|
|
947
|
|
|
|
936
|
|
|
|
|
961
|
|
|
|
|
2,868
|
|
|
|
2,821
|
Depreciation - leased devices
|
|
|
|
|
837
|
|
|
|
724
|
|
|
|
|
535
|
|
|
|
|
2,205
|
|
|
|
1,231
|
Amortization
|
|
|
|
|
255
|
|
|
|
271
|
|
|
|
|
316
|
|
|
|
|
813
|
|
|
|
994
|
Other, net
|
|
|
|
|
150
|
|
|
|
(151
|
)
|
|
|
|
353
|
|
|
|
|
248
|
|
|
|
611
|
Total net operating expenses
|
|
|
|
|
7,855
|
|
|
|
7,197
|
|
|
|
|
7,826
|
|
|
|
|
22,254
|
|
|
|
22,321
|
Operating income (loss)
|
|
|
|
$
|
317
|
|
|
$
|
654
|
|
|
|
$
|
(156
|
)
|
|
|
$
|
1,366
|
|
|
$
|
405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WIRELESS NON-GAAP RECONCILIATION (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
|
Year To Date
|
|
|
|
|
12/31/16
|
|
|
9/30/16
|
|
|
12/31/15
|
|
|
12/31/16
|
|
|
12/31/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
|
$
|
317
|
|
|
|
$
|
654
|
|
|
|
$
|
(156
|
)
|
|
|
$
|
1,366
|
|
|
|
$
|
405
|
|
Loss (gain) from asset dispositions and exchanges, net (4)
|
|
|
|
|
28
|
|
|
|
|
(354
|
)
|
|
|
|
-
|
|
|
|
|
(326
|
)
|
|
|
|
85
|
|
Severance and exit costs (5)
|
|
|
|
|
13
|
|
|
|
|
(11
|
)
|
|
|
|
189
|
|
|
|
|
18
|
|
|
|
|
225
|
|
Contract terminations (6)
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
113
|
|
|
|
|
-
|
|
Litigation and other contingencies (7)
|
|
|
|
|
-
|
|
|
|
|
103
|
|
|
|
|
21
|
|
|
|
|
103
|
|
|
|
|
178
|
|
Reduction in liability - U.S. Cellular asset acquisition (8)
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(20
|
)
|
Depreciation - network and other
|
|
|
|
|
947
|
|
|
|
|
936
|
|
|
|
|
961
|
|
|
|
|
2,868
|
|
|
|
|
2,821
|
|
Depreciation - leased devices
|
|
|
|
|
837
|
|
|
|
|
724
|
|
|
|
|
535
|
|
|
|
|
2,205
|
|
|
|
|
1,231
|
|
Amortization
|
|
|
|
|
255
|
|
|
|
|
271
|
|
|
|
|
316
|
|
|
|
|
813
|
|
|
|
|
994
|
|
Adjusted EBITDA* (3)
|
|
|
|
$
|
2,397
|
|
|
|
$
|
2,323
|
|
|
|
$
|
1,866
|
|
|
|
$
|
7,160
|
|
|
|
$
|
5,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin*
|
|
|
|
|
40.3
|
%
|
|
|
|
38.6
|
%
|
|
|
|
29.9
|
%
|
|
|
|
39.6
|
%
|
|
|
|
30.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for capital expenditures - network and other
|
|
|
|
$
|
389
|
|
|
|
$
|
358
|
|
|
|
$
|
869
|
|
|
|
$
|
1,123
|
|
|
|
$
|
3,512
|
|
Cash paid for capital expenditures - leased devices
|
|
|
|
$
|
767
|
|
|
|
$
|
358
|
|
|
|
$
|
607
|
|
|
|
$
|
1,530
|
|
|
|
$
|
1,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WIRELINE STATEMENTS OF OPERATIONS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
|
Year To Date
|
|
|
|
|
12/31/16
|
|
|
9/30/16
|
|
|
12/31/15
|
|
|
12/31/16
|
|
|
12/31/15
|
Net operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voice
|
|
|
|
$
|
153
|
|
|
|
$
|
172
|
|
|
|
$
|
201
|
|
|
|
$
|
506
|
|
|
|
$
|
646
|
|
Data
|
|
|
|
|
41
|
|
|
|
|
43
|
|
|
|
|
42
|
|
|
|
|
127
|
|
|
|
|
134
|
|
Internet
|
|
|
|
|
281
|
|
|
|
|
288
|
|
|
|
|
317
|
|
|
|
|
871
|
|
|
|
|
968
|
|
Other
|
|
|
|
|
22
|
|
|
|
|
18
|
|
|
|
|
21
|
|
|
|
|
59
|
|
|
|
|
72
|
|
Total net operating revenues
|
|
|
|
|
497
|
|
|
|
|
521
|
|
|
|
|
581
|
|
|
|
|
1,563
|
|
|
|
|
1,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services (exclusive of depreciation and amortization below)
|
|
|
|
|
400
|
|
|
|
|
436
|
|
|
|
|
466
|
|
|
|
|
1,284
|
|
|
|
|
1,495
|
|
Selling, general and administrative
|
|
|
|
|
49
|
|
|
|
|
62
|
|
|
|
|
82
|
|
|
|
|
189
|
|
|
|
|
254
|
|
Depreciation and amortization
|
|
|
|
|
51
|
|
|
|
|
48
|
|
|
|
|
50
|
|
|
|
|
148
|
|
|
|
|
144
|
|
Other, net
|
|
|
|
|
6
|
|
|
|
|
7
|
|
|
|
|
20
|
|
|
|
|
13
|
|
|
|
|
22
|
|
Total net operating expenses
|
|
|
|
|
506
|
|
|
|
|
553
|
|
|
|
|
618
|
|
|
|
|
1,634
|
|
|
|
|
1,915
|
|
Operating loss
|
|
|
|
$
|
(9
|
)
|
|
|
$
|
(32
|
)
|
|
|
$
|
(37
|
)
|
|
|
$
|
(71
|
)
|
|
|
$
|
(95
|
)
|
WIRELINE NON-GAAP RECONCILIATION (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
|
Year To Date
|
|
|
|
|
12/31/16
|
|
|
9/30/16
|
|
|
12/31/15
|
|
|
12/31/16
|
|
|
12/31/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
|
$
|
(9
|
)
|
|
|
$
|
(32
|
)
|
|
|
$
|
(37
|
)
|
|
|
$
|
(71
|
)
|
|
|
$
|
(95
|
)
|
Severance and exit costs (5)
|
|
|
|
|
6
|
|
|
|
|
7
|
|
|
|
|
20
|
|
|
|
|
13
|
|
|
|
|
22
|
|
Depreciation and amortization
|
|
|
|
|
51
|
|
|
|
|
48
|
|
|
|
|
50
|
|
|
|
|
148
|
|
|
|
|
144
|
|
Adjusted EBITDA*
|
|
|
|
$
|
48
|
|
|
|
$
|
23
|
|
|
|
$
|
33
|
|
|
|
$
|
90
|
|
|
|
$
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin*
|
|
|
|
|
9.7
|
%
|
|
|
|
4.4
|
%
|
|
|
|
5.7
|
%
|
|
|
|
5.8
|
%
|
|
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for capital expenditures - network and other
|
|
|
|
$
|
24
|
|
|
|
$
|
31
|
|
|
|
$
|
74
|
|
|
|
$
|
75
|
|
|
|
$
|
205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED CASH FLOW INFORMATION (Unaudited)**
|
|
|
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year to Date
|
|
|
|
|
|
12/31/16
|
|
|
12/31/15
|
Operating activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
$
|
(923
|
)
|
|
|
$
|
(1,441
|
)
|
Depreciation and amortization
|
|
|
|
|
|
6,040
|
|
|
|
|
5,196
|
|
Provision for losses on accounts receivable
|
|
|
|
|
|
406
|
|
|
|
|
385
|
|
Share-based and long-term incentive compensation expense
|
|
|
|
|
|
57
|
|
|
|
|
58
|
|
Deferred income tax expense
|
|
|
|
|
|
276
|
|
|
|
|
120
|
|
Gains from asset dispositions and exchanges
|
|
|
|
|
|
(354
|
)
|
|
|
|
-
|
|
Amortization of long-term debt premiums, net
|
|
|
|
|
|
(234
|
)
|
|
|
|
(236
|
)
|
Loss on disposal of property, plant and equipment
|
|
|
|
|
|
368
|
|
|
|
|
228
|
|
Contract terminations
|
|
|
|
|
|
96
|
|
|
|
|
-
|
|
Other changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts and notes receivable
|
|
|
|
|
|
(542
|
)
|
|
|
|
(1,482
|
)
|
Inventories and other current assets
|
|
|
|
|
|
(2,254
|
)
|
|
|
|
(2,165
|
)
|
Deferred purchase price from sale of receivables
|
|
|
|
|
|
(220
|
)
|
|
|
|
2,048
|
|
Accounts payable and other current liabilities
|
|
|
|
|
|
(97
|
)
|
|
|
|
(816
|
)
|
Non-current assets and liabilities, net
|
|
|
|
|
|
(313
|
)
|
|
|
|
112
|
|
Other, net
|
|
|
|
|
|
594
|
|
|
|
|
596
|
|
Net cash provided by operating activities
|
|
|
|
|
|
2,900
|
|
|
|
|
2,603
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
Capital expenditures - network and other
|
|
|
|
|
|
(1,421
|
)
|
|
|
|
(3,958
|
)
|
Capital expenditures - leased devices
|
|
|
|
|
|
(1,530
|
)
|
|
|
|
(1,724
|
)
|
Expenditures relating to FCC licenses
|
|
|
|
|
|
(46
|
)
|
|
|
|
(75
|
)
|
Change in short-term investments, net
|
|
|
|
|
|
(2,349
|
)
|
|
|
|
125
|
|
Proceeds from sales of assets and FCC licenses
|
|
|
|
|
|
126
|
|
|
|
|
36
|
|
Proceeds from sale-leaseback transaction
|
|
|
|
|
|
-
|
|
|
|
|
1,136
|
|
Other, net
|
|
|
|
|
|
26
|
|
|
|
|
(25
|
)
|
Net cash used in investing activities
|
|
|
|
|
|
(5,194
|
)
|
|
|
|
(4,485
|
)
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
Proceeds from debt and financings
|
|
|
|
|
|
6,830
|
|
|
|
|
755
|
|
Repayments of debt, financing and capital lease obligations
|
|
|
|
|
|
(3,266
|
)
|
|
|
|
(727
|
)
|
Debt financing costs
|
|
|
|
|
|
(272
|
)
|
|
|
|
(1
|
)
|
Other, net
|
|
|
|
|
|
68
|
|
|
|
|
20
|
|
Net cash provided by financing activities
|
|
|
|
|
|
3,360
|
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
|
|
1,066
|
|
|
|
|
(1,835
|
)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
|
|
2,641
|
|
|
|
|
4,010
|
|
Cash and cash equivalents, end of period
|
|
|
|
|
$
|
3,707
|
|
|
|
$
|
2,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION TO CONSOLIDATED FREE CASH FLOW* (NON-GAAP)
(Unaudited)
|
|
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
Year to Date
|
|
|
|
|
12/31/16
|
|
|
9/30/16
|
|
|
12/31/15
|
|
12/31/16
|
|
|
12/31/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
$
|
650
|
|
|
|
$
|
1,708
|
|
|
|
$
|
806
|
|
|
$
|
2,900
|
|
|
|
$
|
2,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures - network and other
|
|
|
|
|
(478
|
)
|
|
|
|
(470
|
)
|
|
|
|
(994
|
)
|
|
|
(1,421
|
)
|
|
|
|
(3,958
|
)
|
Capital expenditures - leased devices
|
|
|
|
|
(767
|
)
|
|
|
|
(358
|
)
|
|
|
|
(607
|
)
|
|
|
(1,530
|
)
|
|
|
|
(1,724
|
)
|
Expenditures relating to FCC licenses, net
|
|
|
|
|
(14
|
)
|
|
|
|
(17
|
)
|
|
|
|
(30
|
)
|
|
|
(46
|
)
|
|
|
|
(75
|
)
|
Proceeds from sales of assets and FCC licenses
|
|
|
|
|
60
|
|
|
|
|
39
|
|
|
|
|
32
|
|
|
|
126
|
|
|
|
|
36
|
|
Other investing activities, net
|
|
|
|
|
134
|
|
|
|
|
(11
|
)
|
|
|
|
(4
|
)
|
|
|
98
|
|
|
|
|
(25
|
)
|
Free cash flow* (9)
|
|
|
|
$
|
(415
|
)
|
|
|
$
|
891
|
|
|
|
$
|
(797
|
)
|
|
$
|
127
|
|
|
|
$
|
(3,143
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (repayments) proceeds of device financings and sales of future
lease receivables
|
|
|
|
|
(231
|
)
|
|
|
|
(184
|
)
|
|
|
|
1,136
|
|
|
|
400
|
|
|
|
|
1,136
|
|
Adjusted free cash flow*
|
|
|
|
$
|
(646
|
)
|
|
|
$
|
707
|
|
|
|
$
|
339
|
|
|
$
|
527
|
|
|
|
$
|
(2,007
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
**Certain prior period amounts have been reclassified to conform to
the current period presentation.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
|
|
|
|
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
12/31/16
|
|
|
3/31/16
|
ASSETS
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
3,707
|
|
|
|
$
|
2,641
|
|
Short-term investments
|
|
|
|
|
2,349
|
|
|
|
|
-
|
|
Accounts and notes receivable, net
|
|
|
|
|
1,236
|
|
|
|
|
1,099
|
|
Device and accessory inventory
|
|
|
|
|
1,296
|
|
|
|
|
1,173
|
|
Prepaid expenses and other current assets
|
|
|
|
|
1,984
|
|
|
|
|
1,920
|
|
Total current assets
|
|
|
|
|
10,572
|
|
|
|
|
6,833
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
|
19,333
|
|
|
|
|
20,297
|
|
Goodwill
|
|
|
|
|
6,579
|
|
|
|
|
6,575
|
|
FCC licenses and other
|
|
|
|
|
40,556
|
|
|
|
|
40,073
|
|
Definite-lived intangible assets, net
|
|
|
|
|
3,582
|
|
|
|
|
4,469
|
|
Other assets
|
|
|
|
|
673
|
|
|
|
|
728
|
|
Total assets
|
|
|
|
$
|
81,295
|
|
|
|
$
|
78,975
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
2,894
|
|
|
|
$
|
2,899
|
|
Accrued expenses and other current liabilities
|
|
|
|
|
4,189
|
|
|
|
|
4,374
|
|
Current portion of long-term debt, financing and capital lease
obligations
|
|
|
|
|
6,554
|
|
|
|
|
4,690
|
|
Total current liabilities
|
|
|
|
|
13,637
|
|
|
|
|
11,963
|
|
|
|
|
|
|
|
|
|
Long-term debt, financing and capital lease obligations
|
|
|
|
|
30,759
|
|
|
|
|
29,268
|
|
Deferred tax liabilities
|
|
|
|
|
14,238
|
|
|
|
|
13,959
|
|
Other liabilities
|
|
|
|
|
3,665
|
|
|
|
|
4,002
|
|
Total liabilities
|
|
|
|
|
62,299
|
|
|
|
|
59,192
|
|
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
40
|
|
|
|
|
40
|
|
Treasury shares, at cost
|
|
|
|
|
-
|
|
|
|
|
(3
|
)
|
Paid-in capital
|
|
|
|
|
27,694
|
|
|
|
|
27,563
|
|
Accumulated deficit
|
|
|
|
|
(8,301
|
)
|
|
|
|
(7,378
|
)
|
Accumulated other comprehensive loss
|
|
|
|
|
(437
|
)
|
|
|
|
(439
|
)
|
Total stockholders' equity
|
|
|
|
|
18,996
|
|
|
|
|
19,783
|
|
Total liabilities and stockholders' equity
|
|
|
|
$
|
81,295
|
|
|
|
$
|
78,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET DEBT* (NON-GAAP) (Unaudited)
|
|
|
|
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
12/31/16
|
|
|
3/31/16
|
Total debt
|
|
|
|
$
|
37,313
|
|
|
|
$
|
33,958
|
|
Less: Cash and cash equivalents
|
|
|
|
|
(3,707
|
)
|
|
|
|
(2,641
|
)
|
Less: Short-term investments
|
|
|
|
|
(2,349
|
)
|
|
|
|
-
|
|
Net debt*
|
|
|
|
$
|
31,257
|
|
|
|
$
|
31,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHEDULE OF DEBT (Unaudited)
|
|
|
|
|
|
|
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/16
|
ISSUER
|
|
|
|
MATURITY
|
|
|
PRINCIPAL
|
Sprint Corporation
|
|
|
|
|
|
|
|
7.25% Senior notes due 2021
|
|
|
|
09/15/2021
|
|
|
$
|
2,250
|
7.875% Senior notes due 2023
|
|
|
|
09/15/2023
|
|
|
|
4,250
|
7.125% Senior notes due 2024
|
|
|
|
06/15/2024
|
|
|
|
2,500
|
7.625% Senior notes due 2025
|
|
|
|
02/15/2025
|
|
|
|
1,500
|
Sprint Corporation
|
|
|
|
|
|
|
|
10,500
|
|
|
|
|
|
|
|
|
Sprint Spectrum Co LLC, Sprint Spectrum Co II LLC and Sprint
Spectrum Co III LLC
|
|
|
|
|
|
|
3.36% Senior secured notes due 2021
|
|
|
|
09/20/2021
|
|
|
|
3,500
|
Sprint Spectrum Co LLC, Sprint Spectrum Co II LLC and Sprint
Spectrum Co III LLC
|
|
|
|
|
|
|
|
3,500
|
|
|
|
|
|
|
|
|
Sprint Communications, Inc.
|
|
|
|
|
|
|
|
Export Development Canada Facility (Tranche 4)
|
|
|
|
12/15/2017
|
|
|
|
250
|
Export Development Canada Facility (Tranche 3)
|
|
|
|
12/17/2019
|
|
|
|
300
|
9.125% Senior notes due 2017
|
|
|
|
03/01/2017
|
|
|
|
1,000
|
8.375% Senior notes due 2017
|
|
|
|
08/15/2017
|
|
|
|
1,300
|
9% Guaranteed notes due 2018
|
|
|
|
11/15/2018
|
|
|
|
3,000
|
7% Guaranteed notes due 2020
|
|
|
|
03/01/2020
|
|
|
|
1,000
|
7% Senior notes due 2020
|
|
|
|
08/15/2020
|
|
|
|
1,500
|
11.5% Senior notes due 2021
|
|
|
|
11/15/2021
|
|
|
|
1,000
|
9.25% Debentures due 2022
|
|
|
|
04/15/2022
|
|
|
|
200
|
6% Senior notes due 2022
|
|
|
|
11/15/2022
|
|
|
|
2,280
|
Sprint Communications, Inc.
|
|
|
|
|
|
|
|
11,830
|
|
|
|
|
|
|
|
|
Sprint Capital Corporation
|
|
|
|
|
|
|
|
6.9% Senior notes due 2019
|
|
|
|
05/01/2019
|
|
|
|
1,729
|
6.875% Senior notes due 2028
|
|
|
|
11/15/2028
|
|
|
|
2,475
|
8.75% Senior notes due 2032
|
|
|
|
03/15/2032
|
|
|
|
2,000
|
Sprint Capital Corporation
|
|
|
|
|
|
|
|
6,204
|
|
|
|
|
|
|
|
|
Clearwire Communications LLC
|
|
|
|
|
|
|
|
8.25% Exchangeable notes due 2017 (a)
|
|
|
|
12/01/2017
|
|
|
|
629
|
Clearwire Communications LLC
|
|
|
|
|
|
|
|
629
|
|
|
|
|
|
|
|
|
Secured equipment credit facilities
|
|
|
|
2017 - 2021
|
|
|
|
586
|
|
|
|
|
|
|
|
|
Financing obligations
|
|
|
|
2017 - 2021
|
|
|
|
3,401
|
|
|
|
|
|
|
|
|
Capital leases and other obligations
|
|
|
|
2017 - 2024
|
|
|
|
480
|
Total principal
|
|
|
|
|
|
|
|
37,130
|
|
|
|
|
|
|
|
|
Net premiums and debt financing costs
|
|
|
|
|
|
|
|
183
|
Total debt
|
|
|
|
|
|
|
$
|
37,313
|
|
|
|
|
|
|
|
|
(a) $629 million Clearwire 8.25% Exchangeable Notes due
2040 have both a par call and put in December 2017.
|
|
NOTES TO THE FINANCIAL INFORMATION (Unaudited)
|
|
|
|
(1)
|
|
Sprint platform refers to the Sprint network that supports the
wireless service we provide through our multiple brands.
|
(2)
|
|
Postpaid and prepaid connections from transactions are defined as
retail postpaid and prepaid connections acquired from Clearwire in
July 2013 who had not deactivated or been recaptured on the Sprint
platform.
|
(3)
|
|
As more of our customers elect to lease a device rather than
purchasing one under our subsidized program, there is a significant
positive impact to EBITDA* and Adjusted EBITDA* from direct channel
sales primarily due to the fact the cost of the device is not
recorded as cost of products but rather is depreciated over the
customer lease term. Under our device leasing program for the direct
channel, devices are transferred from inventory to property and
equipment and the cost of the leased device is recognized as
depreciation expense over the customer lease term to an estimated
residual value. The customer payments are recognized as revenue over
the term of the lease. Under our subsidized program, the cash
received from the customer for the device is recognized as equipment
revenue at the point of sale and the cost of the device is
recognized as cost of products. During the three and nine-month
periods ended December 31, 2016, we leased devices through our
Sprint direct channels totaling approximately $1,095 million and
$2,281 million, respectively, which would have increased cost of
products and reduced EBITDA* if they had been purchased under our
subsidized program. Also, during the three and nine-month periods
ended December 31, 2016, the equipment revenue derived from
customers electing to finance their devices through device leasing
or installment billing programs in our direct channel was 66% and
67%, respectively.
The impact to EBITDA* and Adjusted EBITDA* resulting from the sale
of devices under our installment billing program is generally
neutral except for the impact from the time value of money element
related to the imputed interest on the installment receivable.
|
(4)
|
|
During the third quarter of fiscal year 2016 and the second quarter
of fiscal year 2015, the company recorded losses on dispositions of
assets primarily related to cell site construction and network
development costs that are no longer relevant as a result of changes
in the company's network plans. During the second quarter of fiscal
year 2016 the company recorded a pre-tax non-cash gain of $354
million related to spectrum swaps with other carriers.
|
(5)
|
|
Severance and exit costs consist of lease exit costs primarily
associated with tower and cell sites, access exit costs related to
payments that will continue to be made under the company's backhaul
access contracts for which the company will no longer be receiving
any economic benefit, and severance costs associated with reduction
in its work force.
|
(6)
|
|
Contract terminations primarily relate to the termination of our
pre-existing wholesale arrangement with Ntelos Holding Corp.
|
(7)
|
|
Litigation and other contingencies consist of unfavorable
developments associated with legal as well as federal and state
matters such as sales, use or property taxes.
|
(8)
|
|
As a result of the U.S. Cellular asset acquisition, we recorded a
liability related to network shut-down costs, which primarily
consisted of lease exit costs, for which we agreed to reimburse U.S.
Cellular. During the third quarter of fiscal year 2014, we
identified favorable trends in actual costs and, as a result,
reduced the liability resulting in a gain of $41 million. During the
first quarter of fiscal year 2015, we revised our estimate and, as a
result, reduced the liability resulting in approximately $20 million
of income.
|
(9)
|
|
Free cash flow* for the three and nine-month periods ended December
31, 2016, included net cash outflows of approximately $370 million
related to the termination of our MLS Tranche 1 arrangement, which
included the repurchase of the devices.
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*FINANCIAL MEASURES
Sprint provides financial measures determined in accordance with GAAP
and adjusted GAAP (non-GAAP). The non-GAAP financial measures reflect
industry conventions, or standard measures of liquidity, profitability
or performance commonly used by the investment community for
comparability purposes. These measurements should be considered in
addition to, but not as a substitute for, financial information prepared
in accordance with GAAP. We have defined below each of the non-GAAP
measures we use, but these measures may not be synonymous to similar
measurement terms used by other companies.
Sprint provides reconciliations of these non-GAAP measures in its
financial reporting. Because Sprint does not predict special items that
might occur in the future, and our forecasts are developed at a level of
detail different than that used to prepare GAAP-based financial
measures, Sprint does not provide reconciliations to GAAP of its
forward-looking financial measures.
The measures used in this release include the following:
EBITDA is operating income/(loss) before depreciation and
amortization. Adjusted EBITDA is EBITDA excluding
severance, exit costs, and other special items. Adjusted EBITDA Margin
represents Adjusted EBITDA divided by non-equipment net operating
revenues for Wireless and Adjusted EBITDA divided by net operating
revenues for Wireline. We believe that Adjusted EBITDA and Adjusted
EBITDA Margin provide useful information to investors because they are
an indicator of the strength and performance of our ongoing business
operations. While depreciation and amortization are considered operating
costs under GAAP, these expenses primarily represent non-cash current
period costs associated with the use of long-lived tangible and
definite-lived intangible assets. Adjusted EBITDA and Adjusted EBITDA
Margin are calculations commonly used as a basis for investors, analysts
and credit rating agencies to evaluate and compare the periodic and
future operating performance and value of companies within the
telecommunications industry.
Sprint Platform Postpaid ABPA is average billings per account and
calculated by dividing postpaid service revenue earned from postpaid
customers plus installment plan billings and lease revenue by the sum of
the monthly average number of postpaid accounts during the period. We
believe that ABPA provides useful information to investors, analysts and
our management to evaluate average Sprint platform postpaid customer
billings per account as it approximates the expected cash collections,
including installment plan billings and lease revenue, per postpaid
account each month.
Sprint Platform Postpaid Phone ABPU is average billings per
postpaid phone user and calculated by dividing service revenue earned
from postpaid phone customers plus installment plan billings and lease
revenue by the sum of the monthly average number of postpaid phone
connections during the period. We believe that ABPU provides useful
information to investors, analysts and our management to evaluate
average Sprint platform postpaid phone customer billings as it
approximates the expected cash collections, including installment plan
billings and lease revenue, per postpaid phone user each month.
Free Cash Flow is the cash provided by operating activities less
the cash used in investing activities other than short-term investments,
including changes in restricted cash, if any, and excluding the
sale-leaseback of devices. Adjusted Free Cash Flow is Free
Cash Flow plus the proceeds from device financings and sales of
future lease receivables, net of repayments. We believe that Free Cash
Flow and Adjusted Free Cash Flow provide useful information to
investors, analysts and our management about the cash generated by our
core operations and net proceeds obtained to fund certain leased
devices, respectively, after interest and dividends, if any, and our
ability to fund scheduled debt maturities and other financing
activities, including discretionary refinancing and retirement of debt
and purchase or sale of investments.
Net Debt is consolidated debt, including current maturities, less
cash and cash equivalents, short-term investments and, if any,
restricted cash. We believe that Net Debt provides useful information to
investors, analysts and credit rating agencies about the capacity of the
company to reduce the debt load and improve its capital structure.
SAFE HARBOR
This release includes "forward-looking statements" within the meaning of
the securities laws. The words "may," "could," "should," "estimate,"
"project," "forecast," "intend," "expect," "anticipate," "believe,"
"target," "plan", "outlook," "providing guidance," and similar
expressions are intended to identify information that is not historical
in nature. All statements that address operating performance, events or
developments that we expect or anticipate will occur in the future -
including statements relating to our network, cost reductions,
connections growth, and liquidity; and statements expressing general
views about future operating results - are forward-looking statements.
Forward-looking statements are estimates and projections reflecting
management's judgment based on currently available information and
involve a number of risks and uncertainties that could cause actual
results to differ materially from those suggested by the forward-looking
statements. With respect to these forward-looking statements, management
has made assumptions regarding, among other things, the development and
deployment of new technologies and services; efficiencies and cost
savings of new technologies and services; customer and network usage;
connection growth and retention; service, speed, coverage and quality;
availability of devices; availability of various financings, including
any leasing transactions; the timing of various events and the economic
environment. Sprint believes these forward-looking statements are
reasonable; however, you should not place undue reliance on
forward-looking statements, which are based on current expectations and
speak only as of the date when made. Sprint undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by law. In addition, forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to
differ materially from our company's historical experience and our
present expectations or projections. Factors that might cause such
differences include, but are not limited to, those discussed in Sprint
Corporation's Annual Report on Form 10-K for the fiscal year ended March
31, 2016. You should understand that it is not possible to predict or
identify all such factors. Consequently, you should not consider any
such list to be a complete set of all potential risks or uncertainties.
About Sprint:
Sprint (NYSE:S) is a communications services company that creates more
and better ways to connect its customers to the things they care about
most. Sprint served 59.5 million connections as of Dec. 31, 2016 and is
widely recognized for developing, engineering and deploying innovative
technologies, including the first wireless 4G service from a national
carrier in the United States; leading no-contract brands including
Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant
national and international push-to-talk capabilities; and a global Tier
1 Internet backbone. Sprint has been named to the Dow Jones
Sustainability Index (DJSI) North America for the past five years. You
can learn more and visit Sprint at www.sprint.com
or www.facebook.com/sprint
and www.twitter.com/sprint.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170131005461/en/
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