Sprint (S) is mostly a mobile telecom company. In 4Q15 (fiscal 3Q15 for Sprint), with its postpaid business as a basis, the company was the fourth-largest wireless carrier in the US.
During fiscal 3Q15 (calendar 4Q15), the company’s Wireless and Wireline segments achieved revenues of ~$7.7 billion and ~$0.58 billion, respectively. Sprint’s EBITDA (earnings before interest, taxes, depreciation, and amortization) from its Wireless and Wireline segments were ~$1.9 billion and ~$0.03 billion, respectively, in fiscal 3Q15.
Forward enterprise multiples of Sprint and peers
As you can see in the above graph, as of April 25, 2016, Sprint’s forward EV-to-EBITDA (enterprise value-to-EBITDA) was ~4.9x. This was the lowest among the top four US wireless players, with T-Mobile (TMUS) at ~5.6x, Verizon at ~6.8x, and AT&T at ~6.5x as of April 25, 2016.
Instead of taking direct exposure to the stock of players in the US telecom industry, you might consider taking a diversified exposure to space by investing in the iShares Core S&P 500 ETF (IVV). IVV held a total of ~2.8% in AT&T (T), Verizon (VZ), CenturyLink (CTL), Frontier Communications (FTR), and Level 3 Communications (LVLT) at the end of March 2016.
In the next and final part of this series, we’ll look at analyst recommendations.