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Sprint Corporation (S)

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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!
  • Mar. 21, 2014, 1:52 PM
    • As part of the restructuring taking place at parent SoftBank's behest, Sprint (S +1.1%) is closing 55 of its worst-performing retail stores and 150 service/repair centers, and laying off 330 technical consultants.
    • In January, Sprint disclosed it had begun conducting layoffs, and would record $165M in Q4 charges related to them. Since then, the carrier has announced it's cutting 1.5K customer service jobs.
    • Sprint's headcount currently stands at ~40K.
    | Comment!
  • Mar. 11, 2014, 10:47 AM
    • Ahead of a big speech at the U.S. Chamber of Commerce, SoftBank's (SFTBF, SFTBY) Masayoshi Son is promising a "massive price war" if skeptical regulators allow Sprint (S +0.7%) to merge with T-Mobile USA (TMUS +2.4%).
    • As expected, Son also insists Sprint and T-Mobile, who between them have a giant portfolio of high-frequency spectrum assets, could act as a credible last-mile broadband rival to phone/cable duopolies if they joined forces.
    • AT&T (T -0.8%) and Verizon (VZ -0.6%) are ticking lower, while Sprint and T-Mobile are up moderately. AT&T has already been cutting prices to counter T-Mobile's aggressive moves - moves that have contributed to FCC/DOJ doubts about the merits of a Sprint/T-Mobile deal.
    • Verizon, for now, is refusing to take part in a price war, and betting its service quality and unmatched 4G coverage will lead its pospaid subs to continue paying a premium.
    • Yesterday: U.S. mobile roundup
    | 15 Comments
  • Mar. 10, 2014, 2:54 PM
    • AT&T (T -0.3%), which unflinchingly stuck with a premium pricing strategy for years, has announced yet another price cut for its Mobile Share plans (previous), as it tries to fend off a share-gaining Verizon and a resurgent T-Mobile.
    • The price of Ma Bell's low-end 2GB Mobile Share plan has been cut by $15/month. The base price for a single user is now $40/month; adding a smartphone via AT&T's Next upgrade plan adds $25/month to the bill. Opting for a traditional phone subsidy/contract instead of Next costs $40/month.
    • T-Mobile (TMUS +0.3%) , meanwhile, has simultaneously increased its data allotments for cheaper postpaid plans - a $50/month plan featuring unlimited voice/text now provides 1GB of data, up from 500MB - and hiked the price of its unlimited data offering by $10 to $80/month.
    • Verizon (VZ -0.5%), which has offered some minor price cuts and promotions lately, insists it won't depart from its premium pricing strategy. CFO Fran Shammo: "We’re not going to buy customers ... You have to earn customers." Shammo also reiterates Verizon's support for subsidies (and with them, service contracts), and says the carrier will take a cautious approach to installment plans.
    • Bloomberg reports SoftBank's (SFTBF, SFTBY) Masayoshi Son, facing regulatory opposition to his plans for a Sprint (S +0.4%) bid for T-Mobile, will shift from arguing a merger is needed combat Verizon/AT&T to arguing a deal will allow Sprint/T-Mobile to act as a last-mile broadband alternative to phone/cable duopolies. Son is due to make a speech tomorrow.
    | 9 Comments
  • Mar. 7, 2014, 9:29 AM
    • Sprint (S) network infrastructure chief Bob Azzi and product development/operations chief Steve Elfman are leaving the company, as SoftBank (SFTBF, SFTBY) continues shaking up the carrier's executive ranks. Ex-Clearwire CTO John Saw has been named Sprint's chief network officer.
    • Sprint's sales and marketing chiefs left last October. A possible factor behind the latest moves: Sprint has seen widespread service quality complaints - Consumer Reports ranked it last among U.S. carriers in 2013 - as it moves aggressively to migrate users to its 4G LTE network.
    • Another potential trigger: Sprint's LTE buildout is slightly behind schedule. The carrier originally planned to offer LTE coverage to 250M POPs by the end of 2013, but later lowered its target to 200M.
    | 5 Comments
  • Mar. 6, 2014, 1:49 PM
    • "I don’t want to insist on [U.S. mobile] consolidation, but I don’t want to rule it out," says Deutsche Telekom (DTEGY, DTEGF) CEO Tim Hoettges.
    • The remarks come after Hoettges reportedly told DT's board he considers a sale of 67%-owned T-Mobile USA (TMUS -1.8%) unlikely in the near-term, given regulatory opposition to a bid from Sprint (S -3.6%) and parent SoftBank (SFTBF, SFTBY).
    • Citing T-Mobile USA's aggressive investments, DT now expects its 2015 free cash flow to only be up "slightly" from 2014 levels. The carrier previously forecast 2015 FCF to rise to €6B ($8.3B) after hitting €4.2B ($5.8B) in 2014.
    • Sources tell Bloomberg Hoettges is now "taking a long-term view in the U.S.," and is focused on converting more of T-Mobile's giant prepaid base into postpaid subs.
    • DT shares fell 3.6% in Frankfurt.  Both T-Mobile and Sprint are selling off in U.S. trading.
    • More on Sprint/T-Mobile
    | 5 Comments
  • Mar. 5, 2014, 4:03 PM
    • Deutsche Telekom (DTEGY, DTEGF) Tim Hoettges says a sale of 67%-owned T-Mobile USA (TMUS +0.1%) is unlikely anytime soon. T-Mobile and Sprint (S -0.5%) have both moved moderately lower in response.
    • The WSJ reported yesterday SoftBank's (SFTBF, SFTBY) Masayoshi Son plans to mount a PR campaign to convince skeptical businesses and policy makers regarding the value of a Sprint/T-Mobile merger.
    • Sprint/SoftBank have been widely reported to be lining up financing for a T-Mobile bid.
    | 7 Comments
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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.