Sprint's Dangerous Assumptions
John Zhang • 47 Comments
John Zhang • 47 Comments
Fri, Jul. 22, 5:04 PM
- As other providers move away from unlimited-data plans, Sprint (S +0.4%) is quietly testing capless plans in a handful of markets at $60/month -- cheaper than it or even T-Mobile (TMUS +1.7%) offers currently.
- The "Unlimited Freedom" plan is reportedly being advertised in Milwaukee and Boston at $60/month with a second line for $40/month and additional lines at $25/month; Oklahoma and parts of Arizona are seeing that offer at $50/month for each of the first two lines and extras at $25/month.
- Sprint currently offers unlimited plans at $75/month for first, $45/month for second and extras at $30/month.
- In another positioning against T-Mobile, it looks to be throttling streaming data for those subscribers, similar to how T-Mobile runs its Binge On and Music Freedom video and music-streaming offerings.
Thu, Jul. 21, 6:37 PM
- Comcast (NASDAQ:CMCSA) says it will sell prepaid cable and Internet, borrowing a model from wireless companies' approach to low-income households and borrowing Boost Mobile (NYSE:S) stores to do so.
- Xfinity Prepaid Services don't require a credit check or contract, and can be topped up like a prepaid phone after an initial setup charge.
- The TV plan will have two tiers: a 45-channel plan ($80 for setup and first 30 days, plus refills of $15 for seven days or $45 for 30 days) and a 140-channel plan ($120 for start-up, $30 for seven days, $90 for 30 days). Internet will start at $80, with $15 for a seven-day refill and $45 for a 30-day refill.
- The offering will roll out later this year to Illinois, Michigan, Georgia, Florida and Indiana, though Comcast's deal with Boost Mobile says it will offer it through Boost's 4,400-store Comcast-overlapping footprint by the end of 2017.
- The move could appeal to the 14M-16M homes that can't pass the necessary credit check for standard contract-based pay TV.
Tue, Jul. 19, 1:13 PM
- The typical metrics that telecom investors examine may not matter as much to their holdings as a favorable macroeconomic environment, industry analyst Craig Moffett writes.
- That's accounting for the price war as well as common bellwethers like average revenue per user, he says. In most industries, developments like telecom has seen in the past year (Verizon's (VZ -0.5%) recent moves to reset pricing; T-Mobile's (TMUS -0.3%) un-carrier promotions; aggressive phone financing revamps) would spur meaty debates about valuation and growth: "But telecom isn't most industries. It has now been a full decade since fundamentals were last a major part of the telco equity performance story (good or bad)."
- Fundamentals may matter again soon, ahead of a new iPhone introduction (that could benefit T-Mobile and Sprint (S -3.9%) more than AT&T and Verizon), and AT&T's (T -0.2%) full integration of DirecTV finances.
- But in the meantime, macro factors are still prevalent: "When interest rates are falling and the dollar is rising, the story appears to have been pretty straightforward, after all: Buy telecom."
Thu, Jul. 14, 3:38 PM
- The FCC voted unanimously today to open up four bands of frequencies above 24 GHz for 5G wireless service, setting the stage for exploiting next-generation technologies for mobile transmission.
- That's nearly 11 GHz of spectrum (3.85 GHz in licensed bands at 28 GHz, 37 GHz and 39 GHz, and 7 GHz in an unlicensed band between 64 GHz and 71 GHz).
- The agency says companies will be able to exploit the spectrum for "fiber-fast" capabilities, up to 100 times faster than current 4G networks.
- In addition, the agency pledged to push for opening up more millimeter wave bands as quickly as it can, via a Further Notice of Proposed Rulemaking that looks to apply today's rules to another 18 GHz of spectrum (in eight additional high-frequency bands)
- In related stocks: (T +0.5%); (VZ -0.2%); (TMUS -0.5%); (S +1.9%); (DISH +1%); (CMCSA +0.4%); (STRP +5.7%); (GSAT -1.2%)
Fri, Jul. 1, 3:33 PM
- The FCC says it will reveal the names of bidders in the forward auction portion of the broadcast incentive spectrum auction, setting the start of the next phase likely in mid-July.
- There are about 100 parties eligible to bid and they have a payment due by 5 p.m. today, which will validate a final list. A 15-business-day period has to follow public notice of the bidders.
- The reverse auction concluded this week with the agency needing to raise $88B to cover $86.4B in payments to broadcasters, a sum that could mean changes to the process (including multiple rounds) as the FCC works to scare it up.
- Spectrum players: VZ, T, TMUS, S, DISH, SBGI, EVC, CMCSA, CHTR, NXST, CBS, MEG
Wed, Jun. 29, 7:45 PM
- The FCC has set the cost of the spectrum being sold in the broadcast spectrum incentive auction at a whopping $86.4B -- a sum that wireless carriers may balk at.
- That means that the FCC might have to sell less spectrum than had been expected, or use multiple rounds to settle bidding by broadcasters.
- The current stage is the reverse auction, where broadcasters bid low to give up their low-band airwaves to the FCC -- and participation has been strong from broadcasters who might have "significantly inflated expectations," says analyst Roger Entner. That's to be followed by a forward auction round of bidding by carriers.
- A second round of reverse auction with the broadcasters may be needed, which could slow the entire process into 2017.
- Spectrum players: VZ, T, TMUS, S, DISH, SBGI, EVC, CMCSA, CHTR, NXST, CBS, MEG
Tue, Jun. 21, 3:00 PM
Tue, Jun. 14, 10:46 AM
- 16 months after the FCC voted 3-2 to impose tough net neutrality rules through its Open Internet order, a federal appeals court has upheld the ruling.The lawsuit challenged the FCC's ability to classify Internet providers as common carriers under Title II regulations, as well as to govern wired and wireless services via the same rules.
- The FCC's rules prohibit the blocking of legal content, the throttling of legal traffic based on content type, and the creation of "fast lanes" for certain types of content. The rules exclude services such as T-Mobile's BingeOn and Verizon's Go90, which don't count against a user's mobile data cap.
- Shares of major U.S. ISPs haven't moved much (if at all) in response to the ruling.
- The full ruling (.pdf)
- U.S. ISPs/carriers: VZ, T, CMCSA, CVC, S, TMUS, WIN, CTL, FTR
Tue, Jun. 7, 2:44 PM
- Believing the company's investments in small cell base stations and other next-gen technologies will allow it to produce solid free cash flow and deliver superior network speeds, FBR's David Dixon has added Sprint (S +3.1%) to his firm's Alpha Generator list, while reiterating an Outperform.
- Dixon: "There is a general lack of understanding on how Sprint can achieve a 10x increase in downlink network speed at less than half the expected cost and achieve a 30% improvement in network coverage from increasing the maximum power levels in devices, which drives a 30% decrease in cost ... If Softbank can create low-cost [pico cell] and [customer premise equipment] solutions using 2.5 GHz spectrum to densify its network, Sprint will have the potential to become the lowest-cost and fastest data network among the national carriers that are migrating to a greater dependency on low-cost WiFi spectrum ahead of a migration to low-cost, shared LTE spectrum in the 3.5 GHz band and beyond."
- Last week: Sprint demos 5G capabilities at Copa America
Fri, Jun. 3, 4:39 PM
- With the high-profile soccer tourney Copa America Centenario getting under way tonight in California, Sprint (NYSE:S) is taking advantage of the attention and foot traffic with a demo of 5G capabilities.
- Partnering with Nokia (NYSE:NOK), the carrier used 73 GHz millimeter wave spectrum to hit download speeds of over 2 Gbps.
- It's a "big deal" to be the first U.S. carrier to demo 5G wireless at a major public event, CTO John Saw says. The technology will "change the way we collaborate, the way we game and virtual reality. ... We're trying to show the use cases."
- The company demonstrated a live streaming virtual reality system from VideoStitch, as well as livestreaming 4K ultra HD video.
- The demo used beam switching to select the best antennas and send targeted signals to devices, and tested how it would deal with obstacles such as different types of window glass.
Wed, Jun. 1, 10:31 AM
- Alibaba (NYSE:BABA) is 2.7% lower in U.S. trading, and SoftBank (OTCPK:SFTBY) up 1.7%, the morning after the Japanese company said it would sell at least $7.9B worth of the Chinese retail conglomerate -- a move that surprised Goldman Sachs.
- The impact of such a sale on Alibaba is minimized somewhat by the way it's put together, says SunTrust's Bob Peck. Some $2B in sales are of shares back to Alibaba (and another $400M to members of the Alibaba Partnership), while a newly created trust is offering $5B in securities exchangeable into Alibaba ADS.
- Goldman's Ikuo Matsuhashi says the news came as a surprise, as many hadn't expected SoftBank to “move so quickly in terms of selling a stake in Alibaba given many market observers still believe that the latter has upside."
- Matsuhashi is maintaining a Buy rating on SoftBank and a target price of ¥7,800, 24.8% upside from its current Tokyo price of ¥6,252.
- As for Sprint (S -0.1%), Matsuhashi says the move isn't indicative of a change in circumstances there, since SoftBank management has already (and recently) expressed confidence that the U.S. telecom's earnings would improve.
Tue, May 31, 10:48 AM
- The Supreme Court has rejected an appeal by Sprint (S +4.5%) of an attempt by New York state to collect $300M in a tax case.
- The state says Sprint deliberately didn't bill customers for taxes on wireless service over seven years, amounting to more than $100M, and it's seeking triple that amount in total damages and penalties. Sprint had argued that federal telecom law applied rather than a New York law imposing sales tax on interstate mobile service.
- The decision leaves in place an October ruling in favor of New York.
Tue, May 17, 4:02 PM
- Sprint (S +2.9%) has created its own in-house advertising and marketing agency, the latest move in what has been a series of cost-cutting measures at the cash-challenged carrier.
- Called Yellow Fan Studios, it will take responsibility for production, design and other creative services in its film and print output. It's hired about 30 professionals so far and expects to add 30 more.
- CEO Marcelo Claure has said that layoffs alone won't be sufficient to turn the company around. On Sprint's last earnings call he said the company had already reduced marketing expenses by 12%.
- Deutsch is still Sprint's ad agency of record, but it recently laid off workers tied to Sprint production work.
- Sprint has had an in-house production studio for many years and will make use of it in the new approach.
- Now read Sprint Shuffles More Numbers Around, Actual Profits Remain Out Of Reach »
Wed, May 4, 11:45 AM
- SoftBank (OTCPK:SFTBY -1.4%) still looks like a bidder in the FCC's broadcast incentive spectrum auction.
- But the company "won't be a big buyer," a source tells CTFN.
- The participation of SoftBank in the auction has been an open question, with spectrum-rich Sprint (S -4.6%) electing to sit out what could be an expensive endeavor. So if it's taking part, it's likely looking for opportunistic purchases and "niche fill-ins."
- SoftBank has been using creative financing to help Sprint with liquidity issues, and so a chance to bid on bargain spectrum could present itself with an obscurely named entity or smaller partner.
- Now read Implications Of SoftBank Split »
Tue, May 3, 9:16 AM
- Sprint (NYSE:S) is up 2.3% premarket following fiscal Q4 earnings where cutting costs had a positive effect on adjusted profits, and across the board the company's losses met or beat expectations despite disappointing customer additions.
- Operating income came to $8M, including charges of $258M. Adjusted EBITDA was up 24% to $2.16B, beating an expected $2.01B.
- For the fiscal year, the company cut $1.3B in costs. It expects a "sustainable reduction of $2B or more of run rate operating expenses" coming out of the next fiscal year.
- It added 22,000 net postpaid phone customers, bringing its fiscal 2015 total to net adds of 438K -- a 2M-customer turnaround from the prior year.
- Overall, total net adds were 447,000 (includes postpaid net adds of 56,000 vs. expected 197,000, prepaid net losses of 264,000, wholesale/affiliate net adds of 655,000). Postpaid churn of 1.72%, 12 basis points better than prior year and lowest in a Q4.
- Sprint's forecasting fiscal 2016 adjusted EBITDA of $9.5B-$10B (vs. consensus for $9.64B), and operating income of $1B-$1.5B. It also sees full-year capex of about $3B (with non-network expenditures dropping Y/Y) and adjusted free cash flow to be around break-even.
Tue, May 3, 7:34 AM
- Sprint (NYSE:S): FQ4 EPS of -$0.14
- Revenue of $8.1B (-2.2% Y/Y)