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Sprint forecasts jump in full-year operating income

A woman talks on a mobile phone as she walks past a Sprint Corp. store in Palo Alto, California.
Kevin Winter | Getty Images
A woman talks on a mobile phone as she walks past a Sprint Corp. store in Palo Alto, California.

Sprint, the No.4 U.S. wireless carrier, forecast a jump in full-year operating income as it continues to slash costs to offset the heavy discounts it had offered to attract customers.

Shares of Sprint were higher in premarket trading immediately following the announcement. (Get the latest quote here.)

Sprint, majority-owned by Japan's SoftBank, said it expected operating income for the year ending March 2017 to be $1 billion to $1.5 billion, a big rise from the $310 million in operating income it posted for the year ended March 31.

The Overland Park, Kansas-based company added 447,000 subscribers in the fourth quarter ended March 31, trailing the average analyst estimate of 518,100, according to research firm FactSet StreetAccount.

Sprint has been offering deep discounts to win customers in a saturated market from larger rivals Verizon Communications Inc ,AT&T and T-Mobile US.

It has also been reining in costs, recently shuttering call centers and slashing jobs to save about $2 billion to $2.5 billion.

"We're not cutting costs for survival. We're cutting costs to be a lot more efficient," said Marcelo Claure, Sprint CEO, on CNBC's "Squawk on the Street." "I guess when you're a company that has less money, you are taught to be a lot more efficient."

The company also stuck to its forecast of about $9.5 billion to $10 billion in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the year ending March 2017.

The company's net operating revenue fell to $8.07 billion in the fourth quarter ended March 31 from $8.28 billion a year earlier.

Sprint's net loss widened to $554 million, or 14 cents per share, from $224 million, or 6 cents per share.

Analysts expected Sprint to post a loss of 12 cents a share on revenue of $8.06 billion, according to Thomson Reuters consensus estimates.

As one of the nation's Top 5 cellular providers, Sprint has cut costs to better compete with rivals Verizon and AT&T and plans to overhaul its cellular network, according to Re/code. It has also offered aggressive discounts, like half-off promotions, to gain new customers, according to Pacific Crest Securities.

"The reason why we're going to be able to offer a competitive differentiating advantage is we have more spectrum than any other carrier in the world. We have over 200 megahertz of spectrum, and therefore, spectrum means more capacity and more speed," said Claure.

Claure was confident that the company had surpassed rivals AT&T and Verizon. "T-Mobile will be the next one. They're in our line of sight. The one we're going to go after now is T-Mobile."

D. A. Davidson analyst James Moorman said he expects to hear Tuesday how new Apple iPhones and Samsung Galaxy phones affected uptake of simplified shared data plans, which were rolled out by Sprint in the latest quarter.

— CNBC's Lenore Fedow, Re/code and Reuters contributed to this report. CNBC and Re/code have a content-sharing partnership.