All You Need to Know about Sprint Today
Sprint skips federal spectrum auction
Sprint (S) has been a subject of a lot of speculation since the FCC (US Federal Communications Commission) repurposed its airwaves auction earlier this year.
Among the national wireless carriers, Sprint and Verizon Communications (VZ) sat out of the spectrum auction, and T-Mobile (TMUS) emerged as the top bidder for airwaves, placing an $8.0-billion bid. AT&T (T) also participated in the spectrum auction.
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Merger rumors dominate discourse
Much of the chatter around Sprint has focused on potential mergers. There have been media reports and insider hints that Sprint and T-Mobile are discussing combining in order to compete with market leaders AT&T and Verizon.
Back in 2014, an attempt to merge Sprint and T-Mobile flopped because of regulatory hurdles under the Obama administration. Reopening talks to combine Sprint and T-Mobile suggests that Sprint and T-Mobile believe that the Trump administration will likely allow such telecom consolidation deals.
Sprint is majority-owned by Japan’s SoftBank, which is led by a billionaire called Masayoshi Son, while T-Mobile is controlled by Germany’s Deutsche Telekom. SoftBank seems to be in a hurry to secure a deal for Sprint, and Son is reported to have reached out to more prospective investors or partners outside Deutsche Telekom.
Son has reportedly held discussions with the leaders of Comcast (CMCSA) and Charter Communications (CHTR). According to the Wall Street Journal, Warren Buffett of Berkshire Hathaway (BRK.A) and John Malone of Liberty Broadband (LBRDA) have also been contacted by Son to discuss potential investments in Sprint.
A deal with Comcast or Charter or investments from Buffett and Malone could help ease the burden on Sprint. The company was carrying total debt of $39.6 billion at the end of fiscal 1Q17, compared with its cash balance of about $2.5 billion. This debt implies a heavy burden on a carrier that is struggling to operate profitably.