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Q3 Sprint gains 344K post paid subs but loses 427K prepaid subs

Sprint’s subscriber growth “is clearly gaining operational momentum,” Jennifer Fritzsche of Wells Fargo Securities wrote this morning, and is likely to surpass analysts’ estimates for net postpaid adds in the third quarter.

But analysts continue to question the carrier’s lack of investment in its network.

Sprint filed preliminary quarterly results with the SEC this morning, and the company offered investors some good news: Total net operating revenues came in at $8.25 billion, up 3 percent year-over-year, and wireless net operating revenues were up 5 percent to $7.85 billion. Sprint said it saw 344,000 net postpaid additions during the quarter and 347,000 net postpaid phone adds, well outpacing the 275,000 predicted by Wells Fargo.

“This is a HUGE deal because wireless revenue showed annual growth only one time in the last eight reported quarters,” Fritzsche wrote in a research note to investors. “Sprint is clearly gaining operational momentum in terms of subscriber growth. Recall, we were the highest on the Street in terms of postpaid net adds … and the company still beat us by almost 75,000. In our view, Sprint’s value message and improved network experience is beginning to resonate with customers.”

Fritzsche reiterated Wells Fargo’s rating of outperform for Sprint shares. Analysts at New Street Research echoed Fritzsche’s sentiments:

“Overall it appears that the positive momentum at Sprint is being sustained,” New Street analysts wrote. “Expect the stock to perform well today.”

RELATED: Sprint shares worth $21 each in spectrum value alone: Wells Fargo

Analysts generally agree that Sprint has effectively addressed concerns about liquidity – for the short term, at least – and should be able to meet its substantial debt obligations through next year. And the carrier has made solid strides in growing its base of postpaid subscribers in recent quarters.

The preliminary figures weren’t entirely positive, however. Sprint plans to post a net loss of 427,000 prepaid users during the quarter, significantly more than Wells Fargo’s estimate of 250,000. And New Street Research noted that Sprint didn’t offer data “on service revenue turnaround that some have been looking for.”

And analysts once again pointed to Sprint’s surprisingly low capex, which continues to raise eyebrows. “Relative to our expectations, more than half the beat was driven by lower capex.”

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