CORPORATE REPORT: Charter, Sprint and HSBC

Sprint posts first quarterly profit in three years

Sprint said Tuesday that it should be able to "strike a deal" in the "near future", driving up shares of the fourth-largest US wireless carrier.

The deal would merge Sprint's wireless reseller capability, known as MVNO, or "mobile virtual wireless operator", with Charter, the second-largest US cable company. Last month, T-Mobile CEO John Legere said he hasn't ruled out a combination with his wireless rival, though he's also told investors not to expect any imminent deal.

Subscribers: Sprint enjoyed its eighth consecutive quarter of postpaid phone net additions, and its total net additions of 61,000 included postpaid net losses of 39,000, prepaid net additions of 35,000, and wholesale and affiliate net adds of 65,000.

"Sprint reached an important milestone this quarter by returning to profitability for the first time in three years".

"This represents the progress of a turnaround journey that has delivered improvements in postpaid phone and prepaid customer growth, a return to top-line growth, and a significantly transformed cost structure", CEO Marcelo Claure said in a statement Tuesday. Next quarter's results will be the real test - is not even a free Sprint service appealing to customers?

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.

"We think an announcement will be coming in the near future", Claure said, adding that this would likely be a "vertical" or "horizontal" integration with one of the potential partners that Sprint is talking to.

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.

Under the failed 2014 merger of Comcast (No. 1 United States cable operator) and Time Warner (No. 2), Charter was going to buy Time Warner systems in Ohio and Kentucky, including Greater Cincinnati, Southwestern Ohio and Northern Kentucky. "I have no idea where Charter came from saying (they're) not interested in buying Sprint", Claure said.

As I reported past year, Charter acquired Time Warner Cable for $78 billion in 2016.

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.

Shares of Charter Communications hit a record high on Monday, surging to $399.95 before closing at $391.91, up 5.8 percentage points, with its market cap increase being prompted by rumors of an acquisition bid from SoftBank. Whether Sprint can negotiate a good deal in extended discussions remains to be seen.



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