Understanding Sprint’s Low Rate of Decline in Fiscal 4Q15 Revenue
Is Sprint Slowing to a Jog? See the Fiscal 4Q15 Results
Sprint’s revenue in fiscal 4Q15
On a YoY (year-over-year) basis, Sprint’s revenue decreased by ~2.5% to reach ~$8.1 billion in fiscal 4Q15 (calendar 1Q16). In fiscal 3Q15, the rate of decline in Sprint’s revenue was ~9.7% YoY. The decline in Sprint’s wireless revenue in fiscal 4Q15 was much lower than what the company witnessed in fiscal 3Q15.
This declining trend of revenues of Sprint’s wireless and wireline components continued in fiscal 4Q15. During the quarter, the telecom’s wireline revenue fell by ~15.9% YoY to ~$0.56 billion. In fiscal 3Q15, this stream declined by ~16% YoY.
Overall, the telecom company’s wireless revenue decreased by ~1.6% YoY to reach ~$7.7 billion in fiscal 4Q15. In fiscal 3Q15, this stream had declined ~9% YoY.
During fiscal 4Q15, Sprint’s wireless equipment revenue increased by ~30.9% YoY to ~$1.5 billion. But its wireless service revenue declined by ~7.2% YoY to $6.2 billion in fiscal 4Q15. We should note here that service revenue is a relatively stable, key stream for wireless carriers like Sprint, T-Mobile (TMUS), Verizon (VZ), and AT&T (T).
Consensus versus actual performance
Sprint’s revenue came above Wall Street’s expectations in fiscal 4Q15. It was ~1% above the consensus estimate of Wall Street’s analysts. As we can see in the graph above, earlier fiscal 3Q15 was the fourth fiscal quarter in a row wherein the company’s revenue did not meet analyst expectations.
For 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, Verizon, Level 3 Communications (LVLT), CenturyLink (CTL), and T-Mobile (TMUS) at the end of March 2016.
Continue to the next part for a look at Sprint’s postpaid customers.
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