Sprint +3.1%; margin improvement overshadows sub losses


After respectively squeezing out postpaid and prepaid sub gains of 58K and 322K in seasonally strong Q4, the Sprint (S) platform respectively lost 231K postpaid and 364K prepaid subs in Q1. After factoring legacy Nextel platform losses, Sprint's total retail postpaid and prepaid losses amounted to 333K and 415K.

Those figures more than offset 281K wholesale/affiliate net adds, and point to additional share loss to Verizon, AT&T, and T-Mobile as Sprint continues pulling out all the stops to expand its 4G LTE coverage amid growing price competition. Sprint ended Q1 with 54.9M subs (30.5M retail postpaid).

Nonetheless, thanks in part to job cuts, adjusted EBITDA rose 22% Y/Y to $1.84B, and adjusted EBITDA margin to 23.4% from 14.5% in Q4 and 18.9% a year ago. A hefty $1.49B was spent on capex, leading free cash flow to total -$1.12B in spite of op. cash flow of $522M.

Wireless service revenue fell slightly Y/Y to $7.26B. Sprint platform postpaid churn rose to 2.11% from 1.84% a year ago, and Sprint platform prepaid churn to 4.33% from 3.05%. Postpaid ARPU was $63.52 vs. $64.11 in Q4 and $63.67 a year ago.

Wireline revenue fell another 14% to $770M due to Internet weakness, and wireline adjusted EBITDA margin fell to a mere 1.6% from 14.3% a year ago.

Sprint is upping its 2014 adjusted EBITDA guidance range by $200M to $6.7B-$6.9B.

Q1 results, PR

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