Is Sprint Slowing to a Jog? See the Fiscal 4Q15 Results
Sprint’s core operating profitability in fiscal 4Q15
In fiscal 4Q15 (calendar 1Q16), Sprint’s (S) wireline revenue decreased by ~15.9% YoY (year-over-year) to reach ~$0.56 billion. The telecom company’s consolidated revenue dropped by ~2.5% YoY to ~$8.1 billion during the quarter. But growth in Sprint’s core operating profitability remained robust in fiscal 4Q15.
The telecom player’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) increased by ~23.8% YoY to reach ~$2.2 billion in fiscal 4Q15. At the same time, Sprint’s margin continued to expand during the quarter. Its adjusted EBITDA margin improved from ~21% in fiscal 4Q14 to ~26.7%.
Cost of products and SG&A
In fiscal 4Q15, Sprint’s cost of products declined by ~15.1% YoY to reach ~$1.6 billion. Shrinking upgrades positively affected these costs during the quarter on a YoY basis. Sprint’s upgrade rate was at ~5.9% in fiscal 4Q15, as compared to ~7.5% in fiscal 4Q14.
Sprint’s SG&A (selling, general, and administrative) expenses declined by ~16.8% YoY to reach ~$1.9 billion in fiscal 4Q15. This YoY drop in sales and marketing expenses positively impacted costs during the quarter.
Cost of services
Sprint’s cost of services declined by ~5.7% YoY to reach ~$2.2 billion in fiscal 4Q15. This YoY decline in network costs positively affected these costs.
For a diversified exposure to telecom companies in the US, you might consider investing in the iShares Russell 1000 Value ETF (IWD). IWD held a total of ~2.7% in AT&T (T), Verizon (VZ), Level 3 Communications (LVLT), CenturyLink (CTL), and T-Mobile (TMUS) at the end of March 2016.
Continue to the next part for an analysis of Sprint’s valuation.
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