Dec. 31, 2014, 2:31 PM
- "AT&T (T -1.1%) will find new ways to cause their customers pain [in 2015] - especially those still on grandfathered unlimited plans," predicts T-Mobile (TMUS +0.3%) CEO John Legere, feisty as ever while making his 2015 predictions. The FTC recently sued AT&T for throttling the data speeds of unlimited plan users.
- Legere, whose company has unleashed a margin-crimping price war against over the last two years, also forecasts AT&T will launch a "knock off" version of T-Mobile's Data Stash feature, which lets users roll over unused data from monthly buckets for up to 12 months. "The fine print will be massive, and they’ll miss the first and most important step in the process – which is to stop punishing their customers with domestic overages and instead get rid of them."
- He isn't any kinder to Verizon (VZ -0.8%), predicting Big Red will "keep trying to baffle American wireless customers with BS promos, like the one they did this year telling customers they could get a free iPhone 6 (don’t forget to read the small print!), as well as misleading advertising about everything from coverage maps to device trade-ins."
- As for share-losing Sprint (S +0.6%), Legere sees them "continue throwing out campaigns, offers and promotions – anything to see if it sticks." By mid-year, he expects the carrier to "realize they can’t slash their way to growth and start to invest in their network and customer care."
- Two things Legere has kind words for (besides T-Mobile): 1) Apple Watch (NASDAQ:AAPL), which he predicts will "mark the tipping point when wearables go from niche to mainstream." 2) Phablets, which he expects will see 50% sales growth next year and thereby boost data usage.
- One positive prediction for the industry in general: Legere forecasts 2/3 of devices sold next year by carriers will be subsidy-free, up from 41% in 2014. The margin improvement that has come from moving customers from subsidies to early-upgrade and installment plans has been a silver lining for the industry during its price war.
Dec. 17, 2014, 4:59 PM
- Moody's has cut Sprint's (NYSE:S) corporate family debt rating to B1 (highly speculative) from Ba3 (non-investment grade speculative). Likewise, Sprint's probability of default rating has been raised to B1-PD from Ba3-PD, and its senior unsecured rating to B2 from B1.
- Moody's, echoing more than a few equity analysts: "Today's rating action reflects our expectation that intense competitive challenges and Sprint's limited ability to respond effectively will lead to a sustained period of very weak earnings and cash flow. Consequently, leverage is likely to increase, which when coupled with negative pressure on cash flow from installment billing plans and its phone leasing option, is expected to lead to a steady deterioration in Sprint's liquidity position."
- The agency's outlook is negative, reflecting what it believes to be "limited ability to reverse current trends in the foreseeable future."
Dec. 16, 2014, 6:37 PM
- Two months after fining AT&T $105M for unauthorized charges related to mobile content and services (i.e. cramming), the FCC is set to levy a similar fine on Sprint (NYSE:S), per agency officials.
- FCC commissioners still have to vote on the penalty. The Consumer Financial Protection Bureau is also reportedly thinking of taking action.
- Earlier: Sprint falls below $4
Dec. 16, 2014, 10:01 AM
- Sprint (S -2.1%) is now down 36% from where it traded prior to a disappointing Nov. 3 FQ2 report, and down 63% YTD.
- Aside from worries about postpaid share losses and the aggressive promotions aimed at putting an end to them, a declining high-yield debt market could be taking a toll.
- Sprint had $27B in net debt at the end of FQ2, and might need to raise more funds ahead of the FCC's 2016 broadcast spectrum auction.
Dec. 12, 2014, 6:56 AM
- SoftBank (OTCPK:SFTBY) will soon downsize its Silicon Valley offices, Reuters reports, signaling the company won't revive efforts to buy T-Mobile (NYSE:TMUS).
- The Japanese telecommunications company is also looking to rent out one of two buildings it leased at an annual cost of over $3M, which it had previously designated for T-Mobile.
- The "bulk" of its West Coast manpower is now set to be transferred elsewhere, including the dispersal of development engineers to Sprint (NYSE:S) headquarters in Kansas.
Dec. 10, 2014, 1:02 PM
- "We believe Sprint (S -5.7%) will be the most negatively impacted by competitive responses, and we think the stock is overvalued after factoring in $8B in expenditures for the  broadcast spectrum auctions," says Oppenheimer's Tomothy Horan, downgrading the carrier to Underperform.
- Horan notes Sprint, whose margins are getting pressured by major promotions launched in an attempt to halt postpaid share losses, is trading at 8.8x his firm's 2016 EBITDA estimate, nearly 2x above the multiples for other carriers.
- Like Evercore, Horan thinks the company will have to raise more capital. Unlike Evercore, he expects the funds to be raised via stock rather than debt.
- Shares now -60% YTD, and at their lowest levels since the SoftBank deal closed. They fell yesterday after Verizon and AT&T both suggested the U.S. mobile industry's price war will take a toll on Q4 results.
Dec. 9, 2014, 9:48 AM
- With price pressure from rivals as intense has ever, Verizon has warned it expects to see "short-term pressure" on its wireless margins and EPS, and that retail postpaid disconnects are "trending higher" both Q/Q and Y/Y.
- AT&T (T -2.8%) and Sprint (S -2.3%) aren't responding well to the news; the S&P is down 0.9%. Sprint's moves under new CEO Marcelo Claure (launched in an attempt to stem ongoing postpaid share losses) appear to be contributing to Verizon's challenges. Big Red has been gaining postpaid share relative to AT&T and Sprint, though not T-Mobile.
- T-Mobile (TMUS -5.1%) is down sharply, but shares had already sold off before the Verizon news, thanks to T-Mobile's convertible offering announcement.
Dec. 2, 2014, 11:49 AM
- In a promo that starts on Friday, Sprint (S -1.2%) will offer AT&T (T -1%) and Verizon (VZ -0.7%) subs who switch to Sprint unlimited talk/text plans similar to the ones they're currently on a 50% price cut.
- One catch: Users have to trade in their existing AT&T/Verizon phones, and make an unsubsidized purchase of a Sprint phone (via leasing, installment plans, or a regular retail purchase).
- A Sprint rep "will select the service plan that most closely matches the data allowance" of a user's AT&T/Verizon plan. The carrier will cover up to $350 worth of early termination fees and installment plan balances per line.
- The offer is the latest in a series of aggressive promos and price cuts launched by new Sprint CEO Marcelo Claure, who has made a priority out of halting postpaid share losses. In addition to AT&T/Verizon, the promo takes aim at T-Mobile (TMUS -0.4%), which has been grabbing postpaid share (especially on the low-end) with its own aggressive offers.
- T-Mobile and Verizon's wireless service revenue respectively rose 10.6% and 4.8% in Q3, while AT&T and Sprint's fell 0.2% and 5%.
Nov. 30, 2014, 1:19 PM
- "We now model [Sprint] having to raise an additional $3B of capital over the next 3+ years to both continue investing in its network and fighting to attract subs," predicts Evercore's Jonathan Schildkraut, reiterating a Sell on Sprint (NYSE:S). "We believe this financing will come as debt given [Sprint's] low stock price and the likelihood that SoftBank (OTCPK:SFTBF) would not want to dilute its holdings."
- Schildkraut assumes Sprint will have calendar Q4 free cash flow of -$1.3B, leading to full-year cash burn of $2.95B. He adds Sprint's participation in the FCC's huge 2016 incentive auction (widely considered necessary due to Sprint's relatively weak low-band spectrum portfolio) "could result in the need to raise even more capital.'
- As it is, Sprint had $27B in net debt at the end of September (compares with current equity of $20.3B). Aside from price cuts and 4G investments, postpaid subscriber losses (272K were lost in calendar Q3) have been contributing to cash burn.
Nov. 25, 2014, 4:02 PM
- Sprint (S +3.8%) gradually moved higher today on relatively light volume (20.4M shares vs. a 3-month average of 27.3M). Shares were down 55% YTD going into today, as investors digested ongoing postpaid share losses and an abandoned T-Mobile bid.
- Unlike AT&T, Verizon, T-Mobile, and Dish, Sprint hasn't taken part in the FCC's AWS-3 (high-band) spectrum auction, which has seen $36B worth of bids as of today (far more than expected) and produced sticker shock among industry analysts. Sprint plans to take part in the FCC's huge 600Mhz. incentive auction, which is set for 2016.
Nov. 18, 2014, 2:42 AM
- In another attempt to turn around the country's struggling, third-place wireless carrier, Sprint’s (NYSE:S) new CEO Marcelo Claure is shuffling the company's top execs.
- In a recent memo, Claure named more than two dozen executives who are to be part of his core leadership team and said that three senior Sprint execs, including chief marketing officer Jeff Hallock, would be departing.
- Last quarter, Sprint lost 336K customers, more than any of the big four U.S. carriers.
- Previously: Sprint cutting another 2K jobs
Nov. 7, 2014, 7:51 AM
- Sprint (NYSE:S) discloses it will take an additional $105M in charges for severance and related costs in Q3, as it implements its plan to eliminate 2,000 more jobs in an attempt to hit $1.5B in annual cost cuts.
- Sprint says the charge is in addition to a previously reported $160M charge related to severance and other items stemming from the job cuts.
- S +1.1% premarket.
Nov. 4, 2014, 12:44 PM
Nov. 4, 2014, 12:38 PM
- William Blair's Jim Breen, reiterating an Underperform on Sprint (S -16.9%) following its disappointing Q3 numbers and EBITDA guidance cut: "Sprint reported a Sprint-platform postpaid churn rate that was its highest in the past six years ... postpaid and prepaid losses reflect intense competition, specifically related to competitors’ early- termination fee reimbursements."
- Breen expects Sprint 'will struggle to win high-end subscribers from Verizon and AT&T as their 4G LTE lead and shared data plans will likely have the effect of decreasing churn even further." He also notes improving Sprint's oft-criticized network quality will require significant capex; Sprint just slashed its 2014 capex budget by ~$1B.
- Canaccord's Greg Miller (Hold) isn't convinced Sprint's relatively positive September metrics spell a turnaround. "Preliminary reports have not consistently translated into sustainable trends that improve shareholder value over the long-term ... We look forward to additional details on yet another strategy to restore the company and make it more competitive and successful."
- Goldman (Neutral) is more encouraged by the September numbers, but also expects the costs of boosting subscriber adds to take a toll on ARPU and EBITDA. It expects postpaid phone net losses to fall to 240K in 2015 from 2.2M in 2014.
- On the CC (transcript), Sprint said it expects 2014 EBITDA to be "neutral to modestly higher" compared with 2014 levels. Jefferies notes this is 20% below consensus.
- Cowen (Outperform) still thinks a turnaround can happen. "We believe mgmt. is making the right decisions and that this should lead to outsized subs/EBITDA growth in coming quarters and consequent improvement in stock price."
- Low-end rival T-Mobile (TMUS -3.7%), which has been performing much better than Sprint in recent quarters, is also lower.
- Yesterday's earnings coverage
Nov. 4, 2014, 9:15 AM
Nov. 4, 2014, 4:35 AM
- Troubles at Sprint (NYSE:S) has forced SoftBank (OTCPK:SFTBY) to slash its operating profit forecast, which it now expects to be ¥900B ($7.9B) in the 12 months through March 2015, 10% down from the ¥1T profit it previously estimated.
- The warning came as SoftBank reported that its second-quarter operating profit fell 23%.
- Yesterday, Sprint slashed its full-year adjusted EBITDA guidance to $5.8B-$5.9B from $6.7B-$6.9B and announced that it was cutting another 2K jobs.
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