Sprint CEO: Merging with T-Mobile will provide the “best outcome” for consumers, employees and shareholders
While Sprint reported growth in postpaid net additions during the second quarter of 2019, the carrier lost 91,000 of its most lucrative phone connections in the latest quarter and also lost more than 450,000 connections through its wholesale and affiliate program. Further, Sprint experienced a net loss of $274 million, negatively impacted by the estimated reimbursements to federal and state governments.
In September, the Federal Communications Commission said that it discovered that Sprint improperly collected “tens of millions” of dollars in federal subsidies for 885,000 Lifeline subscribers that weren’t using the service and referred the issue to its enforcement unit.
In response, the carrier stated, “We are committed to reimbursing federal and state governments for any subsidy payments that were collected incorrectly.”
The postpaid net additions of 273,000 were driven by growth in data devices and partially offset by postpaid phone customer losses. Prepaid losses for the quarter were about 207,000 with another 462,000 losses in wholesale/affiliate. Overall, Sprint saw a net reduction in its connection base of 396,000, despite 273,000 positive net adds in postpaid connections.
For the second-quarter, loss per share was $0.07 compared to profit of $0.05, prior year, and Sprint’s total net operating revenues declined to $7.80 billion from $8.43 billion, prior year.
Despite the tumultuous quarter on the connections side, the carrier’s total wireless service revenue was relatively stable year-over-year and its postpaid wireless service revenue of $4.2 billion proved to be relatively flat year-over-year.
The carrier said that it has turned up its 2.5 GHz spectrum on about 85% of its macro sites and has about 35,000 outdoor small cells deployed, between strand mounts and “mini macros.” Its 5G service covers about 16 million people in nine metropolitan areas.
As Sprint’s merger with T-Mobile US has moved through the regulatory approval process much slower than expected, the carrier has seen significant subscriber losses. And while the merger has finally been approved the Justice Department and the Federal Communications Commission, the specifics of the outcome remain uncertain as it faces a legal challenge from 18 state attorneys general in a lawsuit scheduled to go to trial Dec. 9.
The state attorneys general are concerned that the merger would hurt competition, raise prices for cell service, result in a loss of retail jobs and lower wages for the employees who remain.
However, Sprint CEO Michel Combes “remain[s] convinced that merging with T-Mobile and building one of the world’s most advanced 5G networks is the best outcome for all consumers, employees and shareholders.”
