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What’s Sprint’s Capex Estimate for Fiscal 1Q17?



Sprint’s capex

Let’s take a look at Sprint’s (S) anticipated spending on capital expenditure (or capex). To boost its network, Sprint continues to invest in capex. Compared to its peers, Sprint considers itself to have the long-term capital intensity edge due to its spectrum depth.

Sprint’s 1Q17 ended in June 2017. Wall Street expects Sprint’s spending on cash capex, excluding devices leased through indirect channels, to have risen ~79.7% YoY (year-over-year) to reach ~$0.85 billion in the quarter. The carrier has gained many small cell permits in order to carry out its densification plan. Accordingly, it expects a rise in its investment in capex going forward.

In fiscal 4Q16, Sprint spent just over $0.9 billion on cash capex, a fall from $1.3 billion in fiscal 4Q15 and a fall from $1.2 billion in fiscal 3Q16. The significant YoY fall was mainly due to lower network spending, whereas the sequential fall was due to lower leased device capex.

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Expected capex investments in 2017

Sprint’s management expects its cash capex to be in the range of $3.5 billion–$4.0 billion in fiscal 2017, excluding devices leased through indirect channels. The company expects its capex to remain at ~$4.0 billion per year for the next three years.

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

Sprint and T-Mobile’s have spent less on capex mainly due to their lower operating cash flows and the rising debt on their balance sheets.


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