August 1, 2018 / 11:42 AM / in 18 days

Sprint beats profit estimates, says higher prices could affect growth

(Reuters) - Sprint Corp (S.N) on Wednesday topped analysts’ estimates for quarterly profit and new wireless subscribers, but said the higher prices for its revamped phone plans could affect future growth.

The fourth-largest U.S. wireless carrier, which has faced high costs needed to invest in its network, is working to convince regulators to approve its merger with T-Mobile US Inc (TMUS.O). The combined company would have more resources to build its next-generation wireless network, or 5G.

Sprint added a net 87,000 new wireless subscribers who pay a monthly bill during the first quarter, more than double the average analyst estimate of 40,000 additions, according to research firm FactSet.

Shares of the Overland Park, Kansas-based company, which have fallen 9.8 percent this year, were flat at $5.43 in morning trading.

Sprint Chief Executive Michel Combes said during the conference call with analysts that higher prices for new unlimited wireless plans could affect customer additions as the company tries to balance growth and profitability.

While Sprint has the best price for an unlimited plan in the industry, “these pricing changes could pressure growth ads as they are less promotional than previous offers,” Combes said.

FILE PHOTO: The Sprint logo is displayed on a a screen on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., April 30, 2018. REUTERS/Brendan McDermid/File Photo

Still, Combes said he expected Sprint to have positive customer additions on a net basis for the year.

Net income attributable to Sprint fell to $176 million, or 4 cents per share, in the three months ended June 30, compared with $206 million, or 5 cents per share, a year earlier.

Analysts expected the company to break even on a per-share basis, according to Thomson Reuters I/B/E/S.

Churn, or the rate of customer defections, was 1.55 percent during the quarter, up from 1.5 percent a year earlier.

Jonathan Chaplin, an analyst with New Street Research, said in an investor note that he expected Sprint’s average revenue per user to be higher, given an administration fee increase introduced early in the quarter, but noted Sprint’s trends were generally improving.

Sprint’s average revenue per phone subscriber was $49.57 during the quarter, down from $53.92 a year earlier.

In a bid to become the first company to bring 5G technology to major U.S. cities, Sprint has been targeting a first half 2019 launch in at least eight cities, including New York City and Kansas City.

Total operating revenue fell to $8.13 billion from $8.16 billion a year earlier.

Reporting by Shariq Khan and Vibhuti Sharma in Bengaluru and Sheila Dang in New York; Editing by Anil D'Silva and Nick Zieminski

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