Sprint delivered generally better-than-expected quarterly results on Monday but its shares fell amid a continued decline in postpaid phone subscribers and uncertainty over its proposed merger with T-Mobile.
For the third quarter, the company lost 3 cents per share as group revenues slipped 6% to $8.08 billion. Analysts had expected a loss of 4 cents per share on revenue of $8.19 billion.
In the postpaid phone segment, Sprint lost 115,000 subscribers after a 91,000 loss the previous quarter. “Such customers are considered lucrative because they typically pay their bills regularly under longer-term contracts and are less likely to switch carriers,” The Wall Street Journal said.
Analysts had forecast a 160,000 loss in the third quarter but postpaid phone churn — a measure of Sprint’s ability to keep customers — rose to 2.06% from 1.84% a year earlier. The churn level is the highest since the company began disclosing the metric in 2015.
In trading Monday, Sprint shares dropped 3.6% to $4.66.
“Subscribers are not stabilizing; the pace of decline is still accelerating; it is just accelerating at a slightly slower pace than we and consensus expected,” analysts at New Street Research wrote in a client note.
According to Light Reading, “the company’s long-gestating merger with T-Mobile continued to hang over every aspect of Sprint’s results.” While its 2.5GHz 5G network now spans nine major U.S. cities, it has not stated any plans to expand coverage due to the pending deal and, year over year, wireless network spend was down 25.8% in the third quarter.
A New York judge is expected to rule shortly on an antitrust lawsuit filed by 14 states that seeks to block the merger. “I continue to believe the merger with T-Mobile is the best way to deliver the benefits of competition to American consumers,” Sprint CEO Michel Combes said in a news release.
Sprint attributed the increase in postpaid phone churn primarily to customers coming off promotional offers, as well as competitive pressure. It has lost postpaid phone subscribers every quarter since late 2018.
“This quarter, like every other quarter, results were, well, bad,” analysts at MoffettNathanson wrote.
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