Chinese telecoms giant, SoftBank, expects to see a significant return on its investments in US’s No.4 telecoms carrier, Sprint Corp (NYSE:S), after the later announced some impressive results when it released its returns for their first quarterly cycle on Monday.
Sprint has struggled to break even in recent years and the recently released results, along with the company’s announcement that it expects to enjoy positive cash flow this year, may have renewed the interests of investors in the company. That is if activity on Sprint share prices over the last 2 days is anything to go by.
Following the release of the company’s first cycle results, share prices in the company had risen by 27.7% on Monday to close the day at $5.90. This is a clear sign of increased investor’s confidence in the company’s turnaround plan considering the fact that Sprint has struggled to break even over the last few years. In fact, even though the company managed to break even for the first time this year, it still had to report a $301 million loss in its first quarter results.
SoftBank, which squired Sprint for $22 billion in 2013, had the good fortune of riding on the waves of optimism created by the latter’s quarterly returns. This was evident in the fact that SoftBank shares rose by 4.7% by Tuesday morning after the results were announced. This figure represents the biggest intraday trading rise for5 the company over the last two weeks- something that cannot be taken lightly.
Speaking to investors and media representatives during the announcement of the results, Sprint attributed the positive results to growth in the number of post-paid subscribers across its markets. Post-paid subscribers form the most lucrative portion of the telecommunications market and penetration there means more business and more profits both for Sprint and for its parent company, SoftBank.
Conservative estimates by 6 analysts collected by Bloomberg had placed the number at 112,000 new monthly subscribers but, according to data collected by Overland Park, Sprint superseded the estimates and acquired 180,000 new monthly subscribers during the period.
