What’s Sprint’s Liquidity and Debt Position?



Sprint’s liquidity and debt

Over the past few quarters, Sprint (S) has been the only major US telecom company that has been struggling to deliver profits. The top four major US wireless carriers are AT&T (T), Verizon (VZ), T-Mobile (TMUS), and Sprint. However, Sprint has reported positive net income of $206 million in fiscal 1Q17 (quarter ending June 2017) for the first time in three years, and the highest net income in a decade when excluding the impact of the Clearwire transaction in 2013.

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Furthermore, Sprint reported much enhanced total general purpose liquidity of $8.7 billion at the end of fiscal 1Q17, which includes $6.8 billion of cash, cash equivalents, and short-term investments. Additionally, the carrier also has around $0.9 billion available under vendor financing agreements that will be utilized for the acquisition of 2.5 GHz network equipment. Sprint’s balance sheet is constrained with ~$39.6 billion of total debt with ~$1.5 billion of debt maturities over the next four quarters.

Sprint’s reduced cost of debt

According to the company, Sprint moved ahead with the implementation of its financial strategy, which mainly includes diversifying its funding sources, reducing its cost of capital, as well as lowering its future cash interest expenses. Sprint’s management noted that the company repaid $388 million of 8.4% notes due in 2017 and $1.2 billion of 9% guaranteed notes due in 2018. Additionally, the carrier also retired around $300 million related to its Network LeaseCo and Mobile Leasing Solution facilities.

Thus, liquidity initiatives have helped to ease concerns surrounding Sprint’s ability to meet upcoming debt maturities.


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