(Reuters) - Sprint Corp (S.N) reported a much smaller-than-expected quarterly loss on Tuesday, and majority owner SoftBank Corp (9984.T) assuaged investors’ concerns by saying it had no plans to sell its stake in the wireless carrier.
Sprint shares rose nearly 5 percent in afternoon trading as investors shrugged off lower-than-expected revenue. The company has been burning through cash because of monthly leasing plans requiring wireless carriers to pay vendors for devices up front.
However, SoftBank will set up a leasing company with other partners to finance payments of devices leased by Sprint customers, Masayoshi Son, the Japanese company’s chief executive officer, said in a rare appearance on Sprint’s earnings call.
Sprint said it added a net 675,000 customers in the first quarter ended June 30, helped by promotions and offers such as doubling data capacity. Defections, or churn, fell to a record low of 1.56 percent from 2.05 percent a year earlier.
“What they posted today in terms of postpaid churn was very encouraging,” ITG analyst Matt Goodman said. “The question is, can Sprint now start to move in a positive direction, and we see the beginnings of that right now.”
The company has been under pressure to cut costs because of concerns that it was spending too much to acquire and retain customers.
Chief Executive Officer Marcelo Claure, who kickstarted a turnaround plan after taking on the top post at the company, said Sprint had cut costs more than it had expected.
“We are already beginning steps to eliminate as much or more costs next year,” Claure said on the call.
In a race for subscribers, Sprint, which posted 57.7 million customers at the end of the quarter, slipped to fourth place among U.S. wireless carriers, falling behind T-Mobile US Inc TMUS.N, which reported 58.9 million customers for the same period.
Sprint reported a loss of $20 million, or 1 cent per share, compared with a year-earlier profit of $23 million, or 1 cent per share. Analysts on average had expected a loss of 9 cents per share, according to Thomson Reuters I/B/E/S.
Revenue fell 8.7 percent $8.03 billion, missing analysts’ estimates of $8.43 billion.
At Monday’s close, Sprint’s shares had fallen about 20 percent this year.
Reporting by Malathi Nayak in New York and Lehar Maan in Bengaluru; Editing by Saumyadeb Chakrabarty and Lisa Von Ahn