Sprint's (S +7.9%) latest plan to revive a flagging business? A network-leasing unit at owner SoftBank (OTCPK:SFTBY), which would supply the carrier with loans collateralized by wireless equipment -- and some of its spectrum rights.
That's the "crown jewel," and SoftBank had already previously set up a unit to buy (and lease back) Sprint's phone inventory for $1.2B.
The spectrum rights (estimated at north of $115B in value) aren't going anywhere, but Sprint will pursue $3B-$5B from related loans this year. That's against $34B in debt, more than twice Sprint's market value.
Sprint has elected to sit out the upcoming FCC broadcast incentive auction for airwaves. But then it's in a cash crunch, and already sitting on the biggest piece of 2.5 GHz spectrum in the country. So far, ambitions to apply that to creating the fastest wireless network are unrealized.
Drawing some billions from its spectrum is getting closer to a last resort as Sprint buys time for a network turnaround. “I don’t think Sprint will go belly-up. Masa would probably be there to bail them out,” says Recon Analytics analyst Roger Entner. “But it shows what kind of bind Sprint is in, when you have to collateralize the plates and silverware.”
Shares in Sprint closed at a 2016 high today, and are up 35% over the past month.
Related: Sprint's Spectrum Is Worth A Premium, Not A Discount (Mar. 02 2016)
Related: Sprint: Still A Terminal Short (Mar. 02 2016)
Related: Run, Don't Walk Away From Sprint (Jan. 26 2016)
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