U.S. telco’s net adds slump on lower wholesale and affiliate additions.

Sprint on Tuesday raised its outlook after reporting its first quarterly net profit for three years off the back of its aggressive cost-cutting programme.

However, revenue growth was modest and net customer additions fell considerably compared to a year earlier.

The U.S. telco generated revenue of $8.16 billion (€6.91 billion) in its fiscal first quarter – up slightly from $8.01 billion a year earlier – as falling service revenue was offset by an uptick in equipment revenue.

Operating income jumped to $1.16 billion from $361 million, as operating expenses fell to $6.99 billion from $7.65 billion. That helped Sprint swing to a net profit of $206 million from a year earlier loss of $302 million.

"Sprint reached an important milestone this quarter by returning to profitability for the first time in three years," said Sprint CEO Marcelo Claure, in a statement. "This represents the progress of a turnaround journey that has delivered improvements in postpaid phone and prepaid customer growth, a return to topline growth, and a significantly transformed cost structure."

The operator raised the low end of its full-year adjusted EBITDA forecast to $10.8 billion from $10.7 billion. It also increased the low end of its operating income forecast to $2.1 billion from $2 billion.

While there are encouraging signs on the financial front, operationally, the picture is less rosy.

Sprint added 61,000 new customers during the three months to 30 June. A year earlier, net additions came in at 602,000.

Its rivals faired much better: AT&T added 2.28 million connections during the quarter, of which 127,000 were postpaid connections. Verizon added 633,000 retail mobile customers, which included 614,000 postpaid customers. T-Mobile US added 1.3 million new customers, of which 817,000 were branded postpaid customers.

Meanwhile, Sprint lost 39,000 postpaid customers, despite increasing its postpaid phone base by 88,000. Prepaid net additions came in at 35,000, a huge improvement on the 306,000 loss a year earlier. However, wholesale and affiliate net additions fell to 65,000 from 728,000 a year ago.

Sprint ended the quarter with 53.70 million mobile customers, up from 53.36 million in fiscal Q1 2016. That leaves it a distant fourth behind T-Mobile US, which has 69.56 million customers.