Sprint Surprises with Profit, Says a Deal May Be Coming Soon


Meanwhile, SoftBank's efforts over the past few years to whip Sprint's finances into shape via deep cost cuts and investment in its wireless and sales networks are finally paying off. Sprint reported a $206 million net profit for the April-June quarter Tuesday, marking its first quarter in the black in three years. "The company delivered almost $370 million of combined year-over-year reductions in cost of services and SG&A expenses in the quarter, bringing the total reduction during the last nine quarters to almost $4 billion".

Therefore, the firm believes, irrespective of the potential M&A target, be it Charter, T-Mobile US Inc (NASDAQ: TMUS), DISH Network Corp (NASDAQ: DISH) or someone else, there is a good possibility that SoftBank would pick up the remaining stake in Sprint.

Combining No. 3 T-Mobile and fourth-place Sprint would create an entity large enough to challenge the duopoly of Verizon Communications and AT&T.

"Sprint reached an important milestone this quarter by returning to profitability for the first time in three years", CEO Marcelo Claure said in a press release.

"Sprint continued to make progress on its multiyear plan to transform the way it does business and improve its cost structure", Sprint said Tuesday.

A deal is coming, he promised, adding he was "highly encouraged" by early talks with potential partners.

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Under the failed 2014 merger of Comcast (No. 1 USA cable operator) and Time Warner (No. 2), Charter was going to buy Time Warner systems in Ohio and Kentucky, including Greater Cincinnati, Southwestern Ohio and Northern Kentucky.

Read between the lines of Sprint Corp.'s quarterly results statement, and it says, "Please buy us". After rallying more than 130% in 2016 in anticipation of a corporate turnaround, as of Monday afternoon Sprint stock was down just a bit year-to-date largely because evidence of that turnaround remained obscured. Sprint now expects operating income of $2.1 billion to $2.5 billion, up from $2 billion to $2.5 billion.

Revenue rose about 2 percent to $8.16 billion, missing the $8.19 billion analysts expected, according to Zacks.

About that rumor that Sprint had set aside talks with T-Mobile during a supposed two month exclusive period to negotiate with Comcast and Charter, Claure said the reports were "not necessarily factual".

Charter's shares closed at $391.91, up 5.8 percent, after hitting a record high of $399.95. Verizon's launch of an unlimited data plan hurt Sprint's subscriber numbers during the quarter, Claure conceded, but Sprint added 115,000 new customers in July as the market calmed.