In order to rein in costs Sprint has vowed to cut expenses by $2 billion for 2016-2017.
Facing widening losses, and having added fewer subscribers than it initially expected, Sprint Corp has vowed to cut more than $2 billion in costs to rein in expenses and be in black.
So far this year, Sprint’s shares have declined by 4%. They have however jumped by 5.7% yesterday before dipping by 1% and settling at $3.53
In the fourth quarter, Sprint’s net operating profits had fallen from $8.28 billion to $8.07 billion.
Its net loss widened by 14 cents a share or by $554 million from its earlier position of 6 cents per share. Its revenues also did not meet the average expectation of analysts who had targeted a net loss of 12 cents a share, according to Thomson Reuters I/B/E/S.
Sprint Corp has been offering deep discounts to consumers so that they switch from other rival networks.
“There’s been a lot of talk (about) whether we’re being irresponsible bringing in customers at 50 percent off,” said Marcelo Claure, Sprint’s CEO on an earnings conference call. “That’s absolutely not the case.”
Finding itself in the deep end of the pool, Sprint now aims to reduce its expenses and slashing jobs by $2 billion by the end of this financial year, in an attempt to reverse years of customer defections and losses.
Sprint, the 4th largest wireless carrier in the United States, said it had already shed $1.3 billion in costs in 2015.
Claude disclosed that departments such as customer care, information technology, marketing and sales will bear the brunt of the cost cuts.
While it has already laid off 2,500 workers earlier in January this year, it does not foresee any further “massive layoffs” this year, as per the company’s executives.
Of late Sprint has been upgrading its network to better compete with its bigger rivals such as T-Mobile, Verizon Communications Inc., and AT&T Inc.
According to FactSet StreetAccounts, a research firm, Kansas based Sprint has added 56,000 monthly subscribers in the fourth quarter ended March 31 2016. In comparison, other carriers have added 220,300 customers.
Sprint, had forecasted its operating income, for the year ending March 2017, to be in the range of $1 billion to $1.5 billion; it has however posted $310 million for the year ended March 31.
As for its earnings before interest, taxes, depreciation and amortization for 2016-2017, Sprint has stuck to its earlier forecast of $9.5 billion to $10 billion.
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