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A Look at Sprint’s Capex Plans for Fiscal 2017

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Sprint’s capex

Let’s take a closer look at Sprint’s (S) future expected capital expenditure (or capex). Sprint continues to invest in capex to improve its network. Sprint believes that it’s uniquely positioned and will have a capital intensity advantage compared to its peers in the long term, given its spectrum depth.

In Sprint’s fiscal 4Q16, the quarter that ended in March 2017, it spent just over $0.9 billion in cash capex, a fall compared to $1.2 billion in fiscal 3Q16 and $1.3 billion in fiscal 4Q15. The year-over-year fall was driven by lower network spending, as the company has focused on lowering its capex through carrier aggregation and small cell deployments. Meanwhile, the sequential fall was mostly driven by lower leased device capex.

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Expected capex investments in 2017

Sprint expects its cash capex to be in the range of $3.5 billion–$4.0 billion in fiscal 2017, excluding the impact of leased devices sold through indirect channels. Sprint’s management expects its cash capex to remain at these levels for the next three years.

In comparison, competitor Verizon (VZ) expects its capex to come in at $16.8 billion–$17.5 billion in 2017, whereas AT&T (T) is expected to spend ~$22 billion on capex in 2017. Meanwhile, T-Mobile (TMUS) expects its cash capex for 2017 to be in the range of $4.8 billion–$5.1 billion, excluding capitalized interest.

T-Mobile and Sprint’s lower spending on capex comes from their lower operating cash flows and the rising debt on their balance sheets.

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