Sprint Corp. (S) reported disappointing financial results for the second quarter of fiscal 2014. Both the top and the bottom lines fell below the respective Zacks Consensus Estimate. Consequently, in the aftermarket trade in NYSE, the share price of Sprint was down by 47 cents (7.58%) to $5.73. Notably, Sprint currently has a Zacks Rank #4 (Sell).
Quarterly net loss stood at $765 million or 19 cents per share compared with a net loss of $699 million or 18 cents per share in the year-ago quarter. Net loss per share of 19 cents was significantly wider than the Zacks Consensus Estimate of 5 cents.
Quarterly total revenue came in at $8,488 million, up 9% year over year but failed to meet the Zacks Consensus Estimate of $8,651 million. Operating expenses were $8,680 million, up 8.6% year over year. Operating loss was $192 million compared with $358 million in the year-ago quarter. Adjusted EBITDA grew 11.1% year over year to $1,386 million representing adjusted EBITDA margin of 18.6%, up 110 basis points year over year.
Cash Flow
During the second quarter of fiscal 2014, Sprint generated $1,028 million of cash from operations, up 48.1% year over year. Quarterly free cash flow was a negative $75 million compared with a negative $1,215 million in the prior-year quarter.
Liquidity
At the end of the second quarter of 2014, Sprint had $6,346 million of cash and marketable securities against $7,082 million at the end of fiscal 2013. Total debt outstanding, at the end of the reported quarter was $32,266 million against $32,778 million at the end of fiscal 2013. Second-quarter end debt-to-capitalization ratio was 0.56, on par with the figure reported at 2013 end.
Wireless Segment
Total segment revenue was $7,929 million, up 10.8% year over year. Postpaid revenues totalled $5,377 million, up 3.4%. Prepaid revenues were $1,197 million, up 16.4%. Wholesale revenues were $181 million, up by a substantial 56%. Transactions revenues totalled $135 million, down 24.2%. Equipment revenues were $1,039 million, up by an enormous 63.4% year over year.
Wireline Segment
Total segment revenue was $708 million, down 8.8% year over year. Voice revenues totalled $294 million, down 11.7%. Data revenues were $53 million, down 7%. Internet revenues were $340 million, down 8.9%. Other revenues were $21 million, up 50%.
Subscribers Statistics
In the reported quarter, Sprint gained 827,000 wholesale customers and 35,000 prepaid customers but lost a substantial 272,000 postpaid subscribers. This is a major cause of concern for the company as three of its major competitors, namely, Verizon Communications Inc. (VZ), AT&T Inc. (T) and T-Mobile US Inc. (TMUS) gained massive postpaid subscribers in the same quarter. At the end of the second quarter of fiscal 2014, Sprint had 55.037 million customers, up 0.3% year over year.
Quarterly total retail postpaid churn rate was 2.22% as against 2.09% in the year-ago quarter. Total retail prepaid churn rate was 3.81% as against 3.78% in the prior-year quarter. Total retail postpaid ARPU (average revenue per user) was $60.24, down 5.1% year over year. Total retail postpaid ARPU was $27.73, up 7.2% year over year.
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