Sprint posts first profit in three years and customer gains

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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.

Charter is now planning to launch its own wireless service on Verizon Communications Inc's network next year, and analysts have said that renting a network from a wireless carrier will be more costly long term than owning one. The company has been exploring deal options with T-Mobile US Inc but faces the hurdle of reaching an agreement on price as well as getting the deal approved by regulators.

Sprint added 88,000 subscribers who pay a monthly phone bill in the quarter, compared to 173,000 net additions in the year-earlier period.

CEO Marcelo Claure credited the company's ongoing cost-cutting initiatives, which have seen Sprint slash spending by almost $4 billion over the last nine quarters.

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Debt-heavy Sprint has been trying to turn its business around, and CEO Marcelo Claure said on a call with analysts Tuesday that it could "sustain itself" alone. Next quarter's results will be the real test - is not even a free Sprint service appealing to customers? Revenue totalled to $8.16 billion, compared to $8.01 billion in the previous year and analysts' expectations of $8.11 billion.

Analysts, on average, expected a net loss of 1 cent per share on revenue of $8.11 billion, according to Thomson Reuters I/B/E/S. He also maintained Sprint can be sustainable as a standalone company, but he made it clear the carrier is eagerly pursuing a tie-up with a variety of players.

"We've been going at this since the spectrum auction ended", Claure said. While Sprint started investing more money in network improvements, its quarterly profit came primarily from cost-cutting. 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.

Investors said a deal with Sprint would be negative for Charter bondholders as it would likely increase leverage significantly. Our skepticism about Sprint's deal-making has nothing to do with Sprint's intrinsic attractiveness; its subscriber base is inherently appealing to anyone wanting scale, and its spectrum trove of 2.5 GHz spectrum really does have incremental value.

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