Sprint Corporation (S) is all set to boost its 2.5 GHz network coverage. The company has sealed a $1.8 billion financing deal with three new vendors and has received another $300 million in credit from its existing Canadian financer. The company will use this money to buy 2.5 GHz network equipment.
The company’s three new vendor financing contracts include $800 million from Nokia Networks slated to mature in Jun 2021; $750 million from Samsung maturing in Dec 2022 and $250 million from Alcatel-Lucent scheduled to mature in Dec 2021. The company has also extended its prevailing association with credit agency, Export Development Canada, by $300 million.
In 2013, the company had launched Sprint Spark, which incorporates Sprint’s 800MHz, 1.9GHz and 2.5GHz spectrums together with devices offering tri-band capability and high-definition voice. Furthermore, by using enhanced techniques like carrier aggregation for higher speeds coupled with modernization of its network infrastructure, the carrier aims to provide the best-in-class high-speed data experience to its customers.
Moreover, Sprint has extended its super-fast LTE data speed service, running on 2.5 GHz spectrum, to 16 new markets, including Charlotte, NC, and Indianapolis, IN. This brings the company’s overall number of LTE 2.5 GHz markets to 62, covering in excess of 100 million people. Sprint’s Spark initiative is almost 50% complete and expects to complete LTE rollout by the end of 2015.
We believe Sprint’s initiative to provide super-fast LTE data speed service will not only help it add more customers but will also curb churn rate, which has been a major concern for the company in recent times. In the second quarter of 2014, Sprint gained 827,000 wholesale and 35,000 prepaid customers but lost a substantial 272,000 postpaid subscribers. Quarterly total retail postpaid churn rate was 2.22% as against 2.09% in the year-ago quarter. Total retail prepaid churn rate was 3.81% as against 3.78% in the prior-year quarter.
On the other hand, the company also needs to focus on expense management. Failure to do so will continue to keep its bottom line under pressure.
Sprint currently has a Zacks Rank #3 (Hold).
Other Stocks to Consider
Better-ranked stocks in this sector include Shenandoah Telecommunications Co. (SHEN), Vonage Holdings Corporation (VG) and Telefónica, S.A. (TEF). Shenandoah Telecommunications and Vonage Holdings sport a Zacks Rank #1 (Strong Buy) whereas Telefónica holds a Zacks Rank #2 (Buy).
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