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Understanding Sprint’s Value Proposition in the US Telecom Market

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Sprint’s scale

In this part of our series, we’ll look at some value-centric measures for Sprint (S) among the major companies in the US wireless space. Let’s start with the size of the top four US wireless carriers: Verizon Communications (VZ), AT&T (T), T-Mobile (TMUS), and Sprint.

As of January 16, 2017, AT&T was the largest US telecom player. Verizon was the second-largest, and T-Mobile was the third-largest player by market capitalization. Sprint’s market capitalization remained lower than T-Mobile’s.

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Sprint’s valuation multiples

EV (enterprise value) multiples help investors to understand the value of a company via its sources of capital from the shareholders’ point of view. The EV multiple a forward multiple based on expected values after one year.

As of January 16, 2017, Sprint’s forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) metric was ~6.1x, which was lower than that of T-Mobile at ~6.6x. Integrated US telecom giants Verizon and AT&T had similar EV-to-EBITDA metrics of ~6.85x and ~6.78x, respectively.

In the next article in this series, we’ll look at analysts’ recommendations for Sprint stock.

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