By Malathi Nayak and Anya George Tharakan
(Reuters) - Sprint Corp, the fourth largest U.S. wireless carrier, reported lower-than-expected quarterly results on Tuesday as promotional price cuts drove customer gains but weighed on growth.
The company, in the middle of a turnaround plan, also said it now expects fiscal 2015 adjusted EBITDA at the lower end of its previous forecast of between $7.2 billion and $7.6 billion.
Sprint shares fell 26 cents, or 5.4 percent, to $4.59 on the New York Stock Exchange.
Under Chief Executive Marcelo Claure, the company rolled out half-priced offers, increased data allotments, a hand-delivery service of new phones, new retail stores and the industry's most-affordable iPhone 6 leasing plan at $1 per month to lure customers.
Sprint said it added 1.1 million total net customers in its second quarter. It reported an addition of 237,000 postpaid or monthly users in the period, the first such increase on a quarterly basis over two years. That growth was driven by converting pre-paid customers to postpaid users.
New Chief Financial Officer Tarek Robbiati is aiming to cut costs to the tune of over $2 billion by the end of 2016.
Sprint is "determined to attack its cost base" and will look at areas such as labor costs, network operating expenses, information technology and administrative expenses to reduce costs, Robbiati said on an earnings call without providing details.
"The pricing actions are what's front and center," Jefferies analyst Mike McCormack said. Investors are concerned "whether it's going to cost them a decent amount of money upfront to get those savings."
Keeping up a customer addition streak while aggressively trimming costs is "going to be a tough balancing act," McCormack said.
Sprint has been working with majority owner SoftBank to set up a company that will fund its upfront device payments to help support phone leasing plans. Details on the leasing company will be finalized in the coming weeks and transactions "will most likely be off balance sheet," executives said on the earnings call.
Sprint's net operating revenue fell 6 percent to $7.98 billion in the second quarter ended Sept. 30. Analysts on average had expected revenue of $8.14 billion, according to Thomson Reuters I/B/E/S.
The company's net loss narrowed to $585 million, or 15 cents per share, in the second quarter ended Sept. 30, from $765 million, or 19 cents per share, a year earlier. That was below analysts' estimate of a loss of 8 cents per share.