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Sprint Surges After It Returns to Profit in First Quarter

Sprint Surges After It Returns to Profit in First Quarter”

Charter Communications Inc's shares surged to a record high on Monday after a source said Japan's SoftBank Group Corp was considering an acquisition offer, even as Charter shot down the possibility of it being the acquirer in any merger with SoftBank's US wireless carrier, Sprint Corp.

Sprint, in a statement released to investors, reported net income of $206 million in the first quarter of 2017, along with operating income of $1.2 billion and an adjusted EBITDA of $2.9 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.

The company said it had 88,000 postpaid phone additions during the quarter, the eighth consecutive period of expansion.

Sprint CEO Marcelo Claure said that the profit was "an important milestone" for the carrier on its way to transform its cost structure.

Here's a closer look at some other key metrics from Sprint's quarterly earnings report. The company lost 8 cents per share in the comparable quarter of the prior year, when it did $8.01 billion worth of business.

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

Sprint also scored 35,000 new pre-paid additions, up from a loss of 306,000 in the same period previous year, but less than the 291,000 prepaid additions in the preceding quarter.

Mr. Claure said Sprint will be fine without a deal, but "doing a strategic transaction will always be significantly better than having a stand-alone entity". Claure said he was "a bit surprised" to see that announcement and that Charter talks were part of a "bigger play". 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.

Shares rose 3.3 percent to $8.24 in premarket trading. While Sprint started investing more money in network improvements, its quarterly profit came primarily from cost-cutting.

The offer being considered by Sprint's chairman and SoftBank founder, Masayoshi Son, would be to form a new publicly traded entity that would use SoftBank money to buyout shareholders of both Sprint and Charter at a premium, the people said. The spokesman also turned down requests for comments on whether the negotiations would continue or whether a different price would perhaps regain Charter's interest in a possible buy out.



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