Profits at Sprint dropped 16 percent in the three months through June, as the company focuses on bolstering its wireless subscribers while its awaits federal approval for a proposed $26 billion merger with T-Mobile.
The telecommunications firm based in Overland Park, Kan., added 57,000 new customers during that period, including 87,000 new postpaid subscribers. But merger fees and other costs pushed net income at the nation’s fourth largest carrier down to $176 million.
“By balancing growth and profitability, we were able to grow wireless service revenue sequentially, continue to add retail phone customers, generate net income for the third consecutive quarter, and improve the network,” CEO Michel Combes said in a statement.
Sprint, which is owned by Japanese-carrier SoftBank, has used aggressive marketing tactics to grow its customer base, focusing on unlimited plans that are much cheaper than competitors like Verizon and AT&T. The company earlier this year offered customers who switched to Sprint an ultra-low $15 monthly unlimited data plan, which Combes said was done to test the carrier’s digital capabilities.
“There is significant competition in the market around services and also around service pricing, so we are responding accordingly and promotions is a way,” he told investors. “You can expect that we will liberally use promotions from time to time in order to boost our position in the market.”
Critics of Sprint’s pending merger with T-Mobile, currently the third largest carrier in the U.S., charge that a combined entity would be harmful to consumers because it would put less pressure on the larger firms to pursue competitive pricing. The companies countered that a merger is necessary to keep them competitive with Verizon and AT&T and argued the new entity would be better positioned to compete in the emerging fifth-generation wireless market.
Sprint executives reiterated to investors on Wednesday that the company hopes to launch its 5G network in early 2019.
“We are making good progress in that direction, and of course we are building the building blocks in order to be able to unlock this proposition,” Combes said on the company’s earnings call.
A federal filing released by T-Mobile on Tuesday detailed how the deal was formed. According to the document, Sprint had merger talks with three other companies before agreeing to the transaction with T-Mobile.
