Sprint Reports Mostly Positive News as Merger Rumors Continue
With T-Mobile merger rumors swirling, Sprint reported a smaller Q2 loss than analysts expected. Executives didn’t hold an analyst call, as T-Mobile also didn’t Monday (see 1710230055). "For obvious reasons, given the noise in the media and in the market…
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about potential strategic opportunities for Sprint, we are taking a non-traditional approach to sharing our results with you this quarter," Sprint said. The carrier reported 378,000 new wireless network connections in the quarter to give it just over 54 million at the end of September. But Sprint also said it lost $48 million in the quarter compared with a $206 million profit in the previous quarter. In the same quarter last year, Sprint reported a $142 million loss. Revenue in the recent quarter was $7.9 billion, down from $8.2 billion a year earlier. Sprint earnings are “another encouraging set of results but left investors eagerly anticipating a deal,” wrote Macquarie Capital analyst Amy Yang: “It’s imperative they fire on all cylinders, as stellar numbers give them additional operating leverage” on a deal. Sprint managed to capture 22 percent of the industry’s postpaid phone gross adds, she wrote investors. New Street Research’s Jonathan Chaplin said if a transaction is announced, consensus likely will be that it has a 50 percent chance of winning approval by regulators. One big question is what happens if the deal is rejected, wrote Craig Moffett, analyst at MoffettNathanson. “By now, almost everyone has created at least a rudimentary Sprint and T-Mobile merger model,” Moffett said. “Investors have come to their preliminary synergy estimates. They have scrutinized the HHI [Herfindahl-Hirschman market concentration index] tea leaves, and they have read and re-read all the stories about what DOJ staffers might recommend, and what new DOJ Antitrust Bureau Chief Makan Delrahim might or might not do with whatever that recommendation from his staff turns out to be.” Regulators use the HHI to assess the effect of a transaction on competition.