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Sprint Completes Sale and Leaseback Agreement with Mobile Leasing

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Sprint’s deal with Mobile Leasing Solutions

On December 7, 2015, Sprint (S) participated in the UBS Global Media and Communications Conference. During the conference, Tarek A. Robbiati, Sprint’s CFO (chief financial officer), talked about the status of Sprint’s recent sale and leaseback agreement for handsets with Mobile Leasing Solutions.

Robbiati said, “We have affected a true sale of more than 2.7 million handsets and we’ve received the cash. The transaction closed last week.” He also added, “And why it’s important is because now we have created an example of an ecosystem that we can leverage for the future with probably smaller tranches, but of a higher frequency. We’ll do more of those every quarter, and it’s becoming the norm as to how we’re going to be funding our handset purchases moving forward.”

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Sprint’s leased devices

According to Sprint, the leasing plans were initiated in September 2014. The take rate of these plans surpassed Sprint’s installment plans in fiscal 3Q14 (calendar 4Q14).

In fiscal 4Q14, the take rate of leasing plans reached ~37%. As you can see in the above chart, net leased devices in the carrier’s property plant and equipment were ~$1.8 billion at the end of the quarter. During fiscal 2Q15 (the September quarter), this figure had grown to ~$3.6 billion. The take rate of Sprint’s leasing plans was ~51% during the quarter.

Note that among the top four US wireless players, Sprint and T-Mobile (TMUS) offer leasing plans. Verizon (VZ) and AT&T (T) do not.

In terms of ETF exposure, Sprint made up ~0.57% of the iShares Exponential Technologies ETF (XT) at the end of October 2015. You should note that this ETF had a total exposure of ~12.7% on select players in the global telecommunication sector on the same date.

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