What Does Sprint’s Value Proposition Mean for the Company’s Future?



Sprint’s wireline and wireless operations

In this series, we’ve already analyzed the performances of the top four US mobile players—Verizon Communications (VZ), AT&T (T), T-Mobile (TMUS), and Sprint—across the metro markets of Chicago, Los Angeles, Tampa, and Raleigh according to the RootScore 1H16 reports. Now let’s look at Sprint’s value proposition in the US as of June 17, 2016.

We should note here that Sprint is mostly a mobile telecom company. Among the top four US wireless players, AT&T and Verizon have significant wireline operations, and now AT&T owns satellite TV provider DIRECTV.

Sprint’s EBITDA (earnings before interest, tax, depreciation, and amortization) figures from its wireless and wireline segments were ~$2.1 billion and ~$0.02 billion, respectively, in fiscal 4Q15 (calendar 1Q16).

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Enterprise value multiples

As the graph shows, as of June 17, 2016, Sprint’s next-year EV-to-EBITDA (enterprise-value-to-EBITDA) multiple was ~4.3x—the lowest among the top four US mobile players. T-Mobile’s multiple was ~5.2x, while AT&T’s and Verizon’s had multiples of ~6.6x and ~7x, respectively, as of June 17, 2016.

For diversified exposure to US telecom players, you might consider investing in the SPDR S&P 500 ETF (SPY). SPY had a total of ~2.7% in AT&T (T), Verizon (VZ), CenturyLink (CTL), Level 3 Communications (LVLT), and Frontier Communications (FTR) at the end of May 2016.

In the next and final part of this series, we’ll discuss the latest analyst recommendations for this wireless carriers.


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