Sprint’s liquidity and debt
Sprint (S) has been struggling to move toward profits lately. The company hasn’t reported a positive net income over the past few quarters. Sprint is the only major US telecommunications player still making losses.
The top four US wireless players are AT&T (T), Verizon (VZ), T-Mobile (TMUS), and Sprint. Sprint reported improved total general purpose liquidity of $10.9 billion at the end of its fiscal 4Q16, including $8.3 billion in cash, cash equivalents, and short-term investments.
Sprint also has $1.2 billion available under vendor financing agreements that will be used in its purchase of 2.5 GHz (gigahertz) network equipment. Sprint’s balance sheet is constrained with ~$40.9 billion in total debt, ~$1.9 billion of which will be maturing over the next four quarters.
Sprint’s reduced cost of debt
According to Sprint, it’s maintaining its financial plan by expanding its funding sources, reducing its cost of capital, and further decreasing its future interest payments.
During the company’s fiscal 4Q16 earnings conference call, its management stated, “We replaced our $3.3 billion unsecured revolving bank credit facility with a new $6 billion secured credit facility consisting of a $4 billion seven-year term loan B and a $2 billion four-year revolving bank credit facility.” Sprint also retired $1.6 billion worth of debt maturities with higher interest rates.
Liquidity initiatives have helped to ease concerns about Sprint’s ability to meet its upcoming debt maturities.