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Sprint Corporation (S)

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  • Jun. 24, 2014, 4:27 AM
    • Sprint's (S) troubles are not yet over, as the company is still in the backseat for service and product offerings, and lost 2.5M customers in the last five quarters.
    • Problems at Sprint date back to its 2005 merger with Nextel that left it with a set of conflicting networks and declining service quality. However, in the past three years Sprint has swapped out old equipment at tens of thousands of cell sites nationwide, in the hope of regaining its market share. Sprint also announced yesterday that it will carry the new Samsung Galaxy S5 Sport.
    • In a move resembling last week's T-Mobile announcement, Sprint will also now offer customers a 30-day trial period on its network. Sprint difficulties are also signalling a possible future merger between it an T-Mobile.
    | 8 Comments
  • Jun. 19, 2014, 6:06 PM
    • Sprint (S) has "lined up eight banks" to finance a T-Mobile (TMUS) acquisition, Reuters reports. The companies will reportedly "seek to finalize details of the financing in the coming month so they could announce a merger around August."
    • The financing includes a $40B+ debt package featuring a ~$20B bridge loan from Sprint parent SoftBank (SFTBF), and a $20B refinancing of T-Mobile's present debt. Sprint currently has $26.6B in net debt, and T-Mobile roughly $9B.
    • Bloomberg reported on June 4 Sprint and T-Mobile were near a deal valuing the latter at ~$40/share. CNBC reported last Friday the companies had agreed on a $2B breakup fee, and to have the post-merger company (should regulators allow it to exist) go under the T-Mobile name.
    • S +0.5% AH. TMUS +0.9%.
    | 7 Comments
  • Jun. 18, 2014, 5:13 AM
    • T-Mobile (TMUS) is looking to purchase a few smaller competitors to hedge itself in case a Sprint (S) merger does not come down the pipe.
    • The smaller carriers have a "low-band spectrum", which offers greater service in urban areas due to its ability to penetrate buildings. The company is looking for this advantage in order increase its share in the metropolitan market.
    | 1 Comment
  • Jun. 13, 2014, 10:28 AM
    • CNBC's reported breakup fee figure is higher than the $1B+ previously reported by the WSJ, but still well below the $4B T-Mobile (TMUS +0.2%) was paid by AT&T.
    • The TV network also reports Sprint (S +1.8%) and T-Mobile have agreed the post-merger company will be called T-Mobile. Though the carriers are roughly equal in size, T-Mobile has been performing much better as of late, and keeping its name would please parent Deutsche Telekom (DTEGY), which uses the T-Mobile brand in other markets.
    • Past reports have noted brash T-Mobile CEO John Legere will likely be the head of the combined company.
    • Sprint is trading higher. With skepticism about regulatory approval still running high, a reports about a relatively low breakup fee might be going over well with the Street.
    • Previous: Sprint, T-Mobile reportedly near agreement on ~$40/share deal
    | 7 Comments
  • Jun. 10, 2014, 9:17 AM
    • Believing there's a 70% chance a T-Mobile deal will go through, Macquarie has upgraded Sprint (S) to Outperform.
    • Macquarie downgraded Sprint to Neutral on Dec. 2, when shares were at $8.39. Prior to that, it upgraded to Outperform on Oct. 16, when shares were at $6.03.
    • Investors remain more skeptical a T-Mobile deal will go through, as evidenced by the fact T-Mobile shares trade 15% below a reported $40/share merger price.
    • Previous: Sprint, T-Mobile turn negative as Street mulls merger reports
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  • Jun. 5, 2014, 12:17 PM
    • With worries about the DOJ/FCC's willingness to approve a Sprint (S -2.6%)/T-Mobile (TMUS -2%) merger still running high, shares of both carriers are now lower following reports stating they've largely agreed to the terms of cash/stock deal that would value T-Mobile at ~$40/share.
    • T-Mobile is now 16% below the rumored acquisition price. A deal would reportedly require Sprint to pay ~$16B in cash, issue a similar amount of stock, and assume $9B worth of net debt.
    • Sprint already had $26.6B in net debt at the end of Q1, and has since used its receivables to land a $1.3B credit facility.
    • The WSJ reports Sprint would pay T-Mobile a $1B+ breakup fee consisting of cash and other assets if the deal is shot down. T-Mobile received a $4B breakup fee from AT&T ($3B in cash) in 2011 after regulators derailed their planned merger.
    | Comment!
  • Jun. 4, 2014, 5:56 PM
    • Bloomberg reports Sprint (S) and T-Mobile USA (TMUS) are near an agreement for a deal that would value T-Mobile at ~$40/share. The WSJ is also reporting a ~$40/share price.
    • S +3.7% AH. TMUS +3.2% to $36.02 - a price that points to ongoing regulatory worries.
    • Sprint's offer will reportedly feature a 50-50 cash/stock split, and leave Deutsche Telekom (DTEGY), which currently owns 67% of T-Mobile, with a 15% stake in the combined company. Bloomberg's sources state an announcement could happen by July.
    • In addition, the carriers are reportedly close to agreeing on a breakup fee - Sprint and parent SoftBank (SFTBF) have reportedly been pushing for a smaller breakup fee for a deal that's bound to face tough DOJ/FCC scrutiny; T-Mobile and Deutsche Telekom have wanted a bigger one.
    • More on Sprint/T-Mobile
    | 3 Comments
  • Jun. 3, 2014, 4:07 PM
    • Verizon (VZ -1.5%), Sprint (S -2.2%), and T-Mobile (TMUS -1%) have each closed lower after AT&T guided for no Q2 wireless service revenue growth, and a weak wireless service EBITDA margin.
    • Investors have already been nervous about the impact a T-Mobile-driven price war stands to have on the top and bottom lines of rivals. AT&T mentioned adoption of its Mobile Share Value plans, which saw price cuts after T-Mobile announced a series of aggressive moves, are pressuring its ARPU.
    • Verizon, though offering some modest promotions, has generally stuck to a premium pricing strategy; its disappointing Q1 postpaid subscriber adds - 539K net adds with an estimated 95K decline for phones - fueled questions about whether a strategy change is needed. The fact AT&T expects to add 800K+ postpaid subs in Q2 might heighten those concerns.
    • Sprint has been more aggressive than Verizon, launching its low-cost Framily plans in January and heavily promoting them. But it lost 231K postpaid subs in Q1 as it scrambles to neutralize Verizon/AT&T's 4G coverage leads.
    • One encouraging AT&T datapoint: The carrier expects ~2/3 of postpaid smartphone subs to be on subsidy-free Mobile Share Value plans by year's end. Both AT&T and peers have made slashing subsidy spend a priority.
    | 4 Comments
  • May. 29, 2014, 9:12 AM
    • Japan's Kyodo news agency reports Deutsche Telekom (DTEGY) has signed off on a SoftBank (SFTBF)/Sprint (S) bid to acquire its 67% stake in T-Mobile USA (TMUS).
    • DT has previously suggested it's open to a deal as SoftBank/Sprint worked to line up financing - in addition to T-Mobile's equity, a deal has to account for $8.7B in net debt.
    • But all signs suggest regulators remain wary of a tie-up lowering the number of nationwide U.S. mobile carriers to three, in spite of Masayoshi Son's relentless PR efforts.
    • TMUS +1.6% premarket. S +2.5%.
    | 10 Comments
  • May. 29, 2014, 4:15 AM
    • Sprint (S) Chairman Masayoshi Son reasons that the rise in telecom and cable mergers should allow his company to buy rival T-Mobile (TMUS). Three big mergers have taken place in recent months with Verizon (VZ) acquiring Vodafone (VOD) for $130B, Comcast (CMCSA) buying Time Warner Cable (TWC) for $45B, and the AT&T (T) purchase of DirecTV (DTV) for $49B.
    • "Access to the Internet is currently dominated by three giants with no sizable competitor," says Son.
    • Although the company has not yet made a formal bid on T-Mobile, it looks to lay the framework for a future purchase.
    • Antitrust authorities have previously frowned on such a deal, as it would cut the number of national competitors in the wireless industry to three from four.
    | 9 Comments
  • May. 16, 2014, 5:01 PM
    • Several banks are providing Sprint (S -5.6%) with a $1.3B credit facility backed by its accounts receivable. The receivables are expected to be sold on a revolving basis through the term of the agreement. The agreement's revolving period is set to end in two years.
    • Sprint has been spending heavily on capex as it scrambles to narrow Verizon/AT&T's LTE coverage lead - its 2014 capex budget is $8B - and has also reportedly been lining up financing for a T-Mobile bid. The carrier ended Q1 with $26.6B in net debt.
    • Shares sold off today after rallying yesterday in the wake of a positive FCC spectrum auction ruling.
    | 2 Comments
  • May. 15, 2014, 1:56 PM
    • The FCC has voted 3-2 to restrict how much spectrum AT&T (T +0.2%) and Verizon (VZ -0.2%) can buy in next year's huge low-frequency spectrum auctions.
    • Sprint (S +3.4%) and T-Mobile (TMUS +1.9%) have both lobbied aggressively for restrictions to be placed on AT&T/Verizon, who between them have a huge share of low-frequency mobile spectrum (better for rural/in-building coverage).
    • The decision shortly follows a similar vote in favor of chairman Tom Wheeler's net neutrality proposal - it doesn't prohibit pay-for-priority deals with content providers, but does seek comment on whether they should be banned, as well as on whether other neutrality regulations should be imposed.
    • The FCC is also set to vote on a spectrum cap rule change for vetting mergers/acquisitions. Sprint and T-Mobile are hoping that one doesn't pass.
    | 1 Comment
  • May. 15, 2014, 3:30 AM
    • Sprint's (S) pursuit of T-Mobile (TMUS) could receive unexpected support from Jessica Rosenworcel, a Democratic commissioner at the Federal Communications Commission.
    • Rosenworcel has privately said that the carriers might not be able to remain viable if they stay independent, the WSJ reports.
    • However, while the two GOP commissioners are seen as more likely to back a deal, FCC Chairman Tom Wheeler and the Justice Department are not so keen due to concerns about the impact on competition.
    | 2 Comments
  • May. 11, 2014, 2:09 AM
    • Deutsche Telekom (DTEGF) wants Sprint (S) to agree to a breakup fee of over $1B in the event that regulators block the latter's possible acquisition of T-Mobile US (TMUS), the WSJ reports.
    • The German carrier also wants Sprint to pledge to keep the T-Mobile brand and some of its management.
    • Deutsche Telekom's demands come after regulators implied they would view any Sprint/T-Mobile tie-up skeptically. Three years ago, Deutsche received $3B when authorities blocked the sale of T-Mobile to AT&T.
    • The sides are working on forging a deal in the near term, but could wait until after a government auction of wireless airwaves - which is expected in 2015 - or under a different White House administration.
    • The operators might have a bit more clarity next week, when the FCC is due to decide on how much spectrum carriers can hold and the rules for the spectrum auction.
    | 5 Comments
  • May. 1, 2014, 9:13 AM
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  • May. 1, 2014, 8:01 AM
    • Thanks to aggressive pricing and a slew of promotions, T-Mobile (TMUS) added 1.3M branded postpaid subs (1.2M phone subs), 465K branded prepaid subs, and 600K non-branded subs in Q1. The branded postpaid figure dwarfs Verizon's (VZ) 539K and AT&T's (T) 625K - the difference in phone adds is even larger - and compares with a net loss of 333K for would-be suitor Sprint (S).
    • Regulators mulling a Sprint/T-Mobile tie-up are doubtlessly paying attention, and the same goes for AT&T and Verizon: The former has responded more aggressively to T-Mobile's price cuts thus far than the latter.
    • Thanks to the strong Q1 numbers, which come after T-Mobile added 1.645M total subs (869K branded postpaid) in Q4, the carrier now expects 2.8M-3.3M branded postpaid net adds in 2014, up from a prior 2M-3M. Cash capex is still expected to be in a range of $4.3B-$4.6B.
    • At the same time, T-Mobile's strategy continues taking a near-term toll on its bottom line: Adjusted EBITDA fell 26% Y/Y to $1.09B, and T-Mobile has cut its full-year adjusted EBITDA guidance to $5.6B-$5.8B from $5.7B-$6B. Adjusted EBITDA margin fell 400 bps Q/Q to 20%.
    • Service revenue rose 4.5% Y/Y to $5.34B. Branded postpaid churn fell 20 bps Q/Q and 40 bps Y/Y to 1.5% (a new record). ARPU fell $0.69 Q/Q to $50.01. "Simple free cash flow" (adjusted EBITDA - cash capex) was $141M, down from $357M in Q4 and $239M a year ago.
    • TMUS +7.6% thanks to the sub adds and a Bloomberg report stating Sprint has lined up financing for a bid. Sprint +6.2%. T-Mobile parent Deutsche Telekom (DTEGY) is up 2.9% in Frankfurt.
    | Comment!
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Company Description
Sprint Corp is a communications company offering wireless and wireline communications products and services to individual consumers, businesses, government subscribers and resellers.