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Sprint Corporation (S)

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  • 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.
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  • Apr. 30, 2014, 6:03 PM
    • Bloomberg reports Sprint (S) "plans to push forward" with a T-Mobile USA (TMUS) bid after lining up financing from six banks.
    • SoftBank's (SFTBF) Masayoshi Son is expected to "make a formal bid in June or July," according to one source. SoftBank is still reportedly talking to T-Mobile parent Deutsche Telekom (DTEGF) about who would run the post-merger company; outspoken T-Mobile chief John Legere is the top candidate.
    • While past reports have suggested financing will be available - Sprint is expected to absorb T-Mobile's $8.7B in net debt in the event of a deal - DOJ officials are apparently quite skeptical about the merits of a deal to merge the #3 and #4 U.S. mobile carriers.
    • Son has previously argued he would launch a massive price war if a Sprint/T-Mobile deal was cleared, and would also offer competitive home broadband services (could be easier said than done in high-density urban areas).
    • Sprint announced yesterday it lost 333K postpaid subs in Q1. T-Mobile, which reports tomorrow, has been faring better lately.
    | 4 Comments
  • Apr. 30, 2014, 5:40 PM
    • Top gainers, as of 5:15 p.m.: WTW +12.6%. H +12.1%. GDOT +10.0%. TMUS +7.6%. S +5.8%.
    • Top losers, as of 5:15 p.m.: JDSU -7.2%. OPLK -6.7%. VRS -6.3%. END -4.5%. CRTO -4.2%.
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  • Apr. 29, 2014, 8:21 AM
    • After respectively squeezing out postpaid and prepaid sub gains of 58K and 322K in seasonally strong Q4, the Sprint (S) platform respectively lost 231K postpaid and 364K prepaid subs in Q1. After factoring legacy Nextel platform losses, Sprint's total retail postpaid and prepaid losses amounted to 333K and 415K.
    • Those figures more than offset 281K wholesale/affiliate net adds, and point to additional share loss to Verizon, AT&T, and T-Mobile as Sprint continues pulling out all the stops to expand its 4G LTE coverage amid growing price competition. Sprint ended Q1 with 54.9M subs (30.5M retail postpaid).
    • Nonetheless, thanks in part to job cuts, adjusted EBITDA rose 22% Y/Y to $1.84B, and adjusted EBITDA margin to 23.4% from 14.5% in Q4 and 18.9% a year ago. A hefty $1.49B was spent on capex, leading free cash flow to total -$1.12B in spite of op. cash flow of $522M.
    • Wireless service revenue fell slightly Y/Y to $7.26B. Sprint platform postpaid churn rose to 2.11% from 1.84% a year ago, and Sprint platform prepaid churn to 4.33% from 3.05%. Postpaid ARPU was $63.52 vs. $64.11 in Q4 and $63.67 a year ago.
    • Wireline revenue fell another 14% to $770M due to Internet weakness, and wireline adjusted EBITDA margin fell to a mere 1.6% from 14.3% a year ago.
    • Sprint is upping its 2014 adjusted EBITDA guidance range by $200M to $6.7B-$6.9B.
    • Q1 results, PR
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  • Apr. 29, 2014, 7:02 AM
    | 1 Comment
  • Apr. 28, 2014, 12:40 PM
    • The FCC plans to add 128.5MHz. of spectrum to its screening procedures for vetting mergers and spectrum sales. Sprint (S -4.1%) owns 101MHz. of the spectrum, via its acquisition of Clearwire and its valuable 2.5GHz. band spectrum (good for urban areas).
    • The rule change, due for a May 15 vote, relates to the FCC's scrutiny of deals that give a carrier more than 1/3 of all spectrum in a particular market. Sprint will exceed that threshold in most big markets once the change goes through.
    • Though Sprint won't be forced to sell spectrum in those markets, it could have a much harder time adding to its spectrum position within them via M&A - say, through a merger with T-Mobile USA (TMUS -3.6%).
    • Separately, the FCC plans to provide tougher scrutiny of deals that would lead to a single carrier having over 1/3 of all quality low-frequency (sub-1GHz., better for buildings and rural areas) spectrum in a market, and to limit how much a carrier with such a spectrum position can bid in 2015's anticipated low-frequency auctions.
    • AT&T (T +1.3%) and Verizon (VZ +1.5%), which together control a giant share of low-frequency U.S. mobile spectrum, are the companies targeted by those proposals. Sprint, T-Mobile, and other rivals have been pressuring the FCC to limit how much spectrum AT&T and Verizon can buy in the 2015 auction.
    | 3 Comments
  • Apr. 24, 2014, 10:10 AM
    • Verizon (VZ -2%) had only 539K wireless postpaid net adds in Q1 (549K total), down from 677K a year ago (720K total) and for once below AT&T's quarterly postpaid figure of 625K. Also, retail churn rose 7 bps Y/Y to 1.37%, and retail postpaid churn 6 bps to 1.07%.
    • Those figures raise the question of whether Verizon's commitment to a premium pricing strategy in the face of a T-Mobile-launched price war is impacting subscriber adds.
    • Nonetheless, wireless service revenue grew 7.5% Y/Y, nearly even with Q4's 8% and much better than AT&T's 2.2%. Wireless op. margin rose 210 bps to 35%, and retail postpaid ARPA 6.3% to $159.67. Verizon ended Q1 with 103.3M retail connections (97.3M postpaid).
    • Wireline revenue fell 0.4%, as 4.4% and 6.4% declines in enterprise and wholesale revenue (caused in part by voice weakness) offset a 6.2% increase in consumer retail (driven by 15.5% FiOS growth). Wireline op. margin rose 10 bps to 1.5%.
    • 98K and 57K FiOS Internet and TV subs were respectively added, down from 126K and 96K in Q4. Total broadband connections (FiOS or otherwise) rose 1.5% to 9M.
    • Q1 free cash flow was $3.93B, below net income of $5.99B but above illustrative net income of $3.8B. Verizon is still expecting 4% 2014 revenue and EBITDA growth. Its dividend yield stands at 4.6%.
    • Sprint (S -3.2%) and T-Mobile (TMUS -2%) are following Verizon lower. They fell yesterday in the wake of AT&T's report. Sprint reports on April 29
    • Q1 results, PR,
    | 1 Comment
  • Apr. 23, 2014, 12:10 AM
  • Apr. 22, 2014, 5:35 PM
  • Apr. 7, 2014, 10:45 AM
    • With all signs suggesting U.S. regulators remain opposed to a Sprint/T-Mobile USA merger in spite of Masayoshi Son's PR campaign, rumors have emerged SoftBank (SFTBF) will turn its sights on acquiring Vodafone (VOD +0.9%) if its efforts to fuse the #3 and #4 U.S. carriers are thwarted.
    • It's worth noting Vodafone ($96B market cap) would be much harder for SoftBank ($87B) to digest than T-Mobile ($26B). If it was to try, SoftBank would doubtlessly make use of its 37% stake in soon-to-be-public Alibaba (could have a $50B+ pre-tax value).
    • Sprint (S -2.6%) and T-Mobile (TMUS -1.5%) are seeing moderate declines.
    | 3 Comments
  • Mar. 27, 2014, 11:52 AM
    • SoftBank's (SFTBF) $3.17B sale of Japanese mobile ISP eAccess to Yahoo Japan is fueling speculation the Sprint (S +3.6%) parent is raising funds for a T-Mobile USA (TMUS +1.4%) bid.
    • In spite of regulatory pushback, SoftBank's Masayoshi Son continues to press his case for a deal. "A duopoly is taking over our country," he declared today at an industry trade show. "if you look at [the past] five years … it is a fact that those two big companies increased [their market share] from 56% to 73%. What happens in the next five years?"
    • T-Mobile's recent share gains (following years of losses) might have regulators thinking the next five years could go differently than the last five. The ripple effects of the #4 carrier's aggressive pricing might also influence their thinking.
    • Son has promised he'd launch a "price war" if a Sprint/T-Mobile deal was approved, and that the merged carrier would act as a last-mile broadband rival to cable/phone duopolies - that could be easier said than done in densely-populated urban areas.
    | 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.