Sprint's Dangerous Assumptions
John Zhang • 47 Comments
John Zhang • 47 Comments
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)
Mon, May 2, 5:30 PM
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Fri, Apr. 29, 10:15 AM
- Sprint (NYSE:S) has spiked, now up 2.8%, as it discloses two new transactions providing more than $3B in new liquidity.
- The company say it has a second sale-leaseback deal with Mobile Leasing Solutions on devices, providing $1.1B in cash proceeds.
- Separately, it's signed an 18-month bridge financing deal with Mizuho Bank providing $2B in additional liquidity.
- Those moves are atop $2.2B in network-related financing from earlier this month. The sale-leaseback deal will be accounted for as on-balance sheet financing (assets will continue to be depreciated).
Tue, Apr. 19, 9:57 AM
- Sprint (S +2%) is putting the wraps on a months-long sales reorganization, having named Jerry Gallegos as president of its West area, and tapping Claudio Hidalgo as president of the Florida/Puerto Rico/U.S. Virgin Islands region.
- The company had undertaken a reset that divided sales responsibilities into four U.S. regions, with an area president heading each geography. Along with Gallegos in the West, Sprint has named Kevin Crull to lead Central, Jaime Jones to lead South, and Pat Delvin for Northeast.
- A number of smaller regions within those areas have presidents, and Sprint has named more than a dozen to those positions.
- Gallegos most recently was VP of field sales for Cox Communications. He'll be based in Phoenix and cover 14 western states, including western Texas.
- Now read Seeking Alpha's Market Challenge: Connecting With Telecom »
Fri, Apr. 15, 3:45 PM
- "Investors should ignore all of the issues around EIP and handset lease plans and the vehicles that have been set up to finance these," says New Street Research as it looks ahead to Sprint (S +3.3%) earnings coming April 26.
- Instead, stakeholders should see a closing window for the struggling carrier and focus on ARPU, churn, and share of gross adds it attained. Sprint shares got a pickup yesterday as a tweet from CEO Marcelo Claure spurred chatter that T-Mobile might not be the only one with postpaid phone growth.
- New Street says Sprint will need 25% of industry gross adds for three years to offset its repricing. And promotion-driven ARPU gains that it expects of $0.69 (to $59 for the quarter) would still bean a 7.5% Y/Y decline in ARPU.
- One silver lining: The firm says it's "leery" of shorting the stock, considering the value of spectrum holdings.
- Now read Sprint's Spectrum Is Worth A Premium, Not A Discount »
Thu, Apr. 14, 1:13 PM
- A take from Wells Fargo that T-Mobile (NASDAQ:TMUS) was again set to grab all the industry's postpaid phone growth drew a seemingly skeptical response from Sprint (NYSE:S) chief Marcelo Claure.
- "Hmm??" he tweeted, with a link to Wells' position. Sprint shares have gained 2.6% as some observers wonder whether that means Sprint's adding phones for Q1 as well.
- Citi expects the company may have added net phones in Q1 and is likely to maintain or even improve gross adds Q/Q. T-Mobile, though, will keep increasing share as it has, Citi believes, with phone net adds of 775,000 (that, vs. Wells' estimate that T-Mobile added a net 768,000 handsets).
- Now read Seeking Alpha's Market Challenge: Connecting With Telecom »