Back in November of last year, Sprint had sold leased device assets worth $1.3 billion to Mobile Leasing Solutions (MLS), a company formed by SoftBank with other investor parties. Through that deal, Sprint got a sum of $1.2 billion in total financing. In the same vein, Sprint stated recently this week that it is planning to raise about $2.2 billion by selling a number of its cell tower equipment to yet another new party in the hopes of receiving $2.2 billion. The wireless carrier will be paying back the loan by way of staggered, unequal payments to be completed over a period of a couple of years.
It appears that Sprint will employ the same strategy by making use of spectrum and maybe other assets as well, and then turning them into collateral. This will allow the wireless carrier to pay off billions of money in loans that will become due before this year is over and throughout next year. This approach, however, only serves to put the company on a more risky financial standing.
As noted by Jennifer Fritzsche, an analyst from Wells Fargo Securities, more tranches are expected to be announced in the future, which would increase the cash infusion to a total of somewhere between $3 billion and $5 billion. According to Fritzsche, now that Sprint has set a precedent, it is likely that more efforts to initiate capital infusion will happen in the future. This is echoed by analysts at Barclays, noting that Sprint appears to be intent on offering a mixture of network assets (including spectrum and radio access equipment) in exchange for financing.
To date, all of Sprint’s spectrum assets are valued at over $115 billion, which by any measure, should allow the wireless carrier plenty of business leverage. Moreover, the company also has the option of serving up extra network gear and real estate for interested external investors in order to raise funds to take care of its payables.
With all these debts, when exactly can Sprint bounce back from its losses? Remember that while the wireless carrier was able to gain 501,000 postpaid net additions during the final quarter of last year, it also registered a net loss amounting to $836 million. Not to mention, Sprint operates Boost Mobile, Virgin Mobile and Sprint Prepaid brands. Any answer to the question remains anybody’s guess.
Source: Fierce Wireless