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John Butler, a telecom analyst with Bloomberg, comments regarding Sprint's current state, "They need the subscribers, unlimited is their only hook... For Sprint, it's a make-or-break proposition"

AT&T (T) concluded its unlimited data deal in 2010, and grandfathered in users who had unlimited plans. Verizon (VZ) stopped offering the plans a year ago. That leaves Sprint (S) as the last refuge for data seekers. The provider, with 56 million customers, runs on the campaign, "Truly Unlimited" in ads and vows to stick to that deal as the industry migrates to speedy next-generation networks based on a technology called 4G LTE. Unfortunately, the unlimited data operates at a slow speed. Harold Furchtgott-Roth, a former commissioner at the FCC, boldly states, "The truly unlimited data is in fact limited"; operating at a significantly slower speed than Verizon and AT&T's 4G plan.

Harold Furchtgott-Roth explains in his discussion entitled, "How Competitive Is the Wireless Industry?" that:

Sprint doesn't have enough free-and-clear spectrum to launch a competitive LTE network. And it doesn't have the money to free up spectrum that's already in use.

This message was spread loud and clear and when AT&T signed a four-year deal with Apple (AAPL) to buy at least $15.5 billion worth of the devices. That's roughly 30.5 million phones, according to news reports. In the first quarter of 2012, Sprint activated only 1.5 million iPhones, a pace that would put it dramatically short of its goal.

So is Sprint soon to become the next Nokia (NOK) or Research in Motion (RIMM) which are "have beens" and are slowly deteriorating to a state of bankruptcy? They all hold an exceeding amount of debt:

Company

Total Assets

Total Liabilities

Nokia

47,000,000

28,935,000

Research in Motion

13,731,000

3,631,000

Sprint

50,617,000

40,026,000

*as of March 2012 *numbers in thousands

Additionally, all three companies are said to be undervalued, either due to their low P/E ratio or their potential market cap in a situation of a buy-out. But rumors are numerous and companies like Microsoft (MSFT), which has been assumed to buy out Nokia or Research in Motion, has numerously denied any speculations. Jim Cramer notes that if an educated investor would not want to own shares of any of these companies as evinced by the high percent of short interest, why would an institution like Microsoft want to buy the entire company.

Company

Short Interest (% of float as of 06/15/12)

Nokia

4.4%

Research in Motion

16.54%

Sprint

6.64%

Each company also carries an awful looking earnings sheet containing past earnings and projected earnings:

Nokia

Research in Motion

Sprint

The gap between Sprint and the top two carriers, Verizon and AT&T is quite big, with Verizon's LTE network covering 304 cities, AT&T covering 41, and Sprint soon to cover only 5 cities as of July 15th. While Verizon remains 18 months ahead of AT&T in setting up the LTE network, Sprint is far behind; roughly ten months behind AT&T. Additionally, building this infrastructure requires over 10 billion dollars. This move is an all or nothing gamble. If subscribers do not quickly jump on board as the infrastructure expands Sprint will increase their debt by roughly 25% and will be in a state where bankruptcy will be far more likely than a buy-out.

Unfortunately, the telecommunications sector has little room for a third place runner and for the past three years this has been clearly indicated on Sprint's balance sheets. Yet Sprint is continuing to dump money into their goals, but at what point will they be forced to settle and declare bankruptcy?

Source: Is Sprint Following In Nokia And RIM's Footsteps?