Understanding Sprint’s Capex Guidance

Sprint (S), the fourth-largest wireless operator in the United States, spent $1.13 billion on cash capital expenditures, excluding leased devices, in the first quarter of fiscal 2018, which ended in June. That compares to $0.78 billion in the previous quarter. The sequential growth was mainly driven by higher network spending as it looks to ramp up spending on next-generation network initiatives.

During the Goldman Sachs Communacopia Conference on September 14, Michel Combes, Sprint’s CEO, spoke about the company’s capex going forward. He said the company is expecting its cash capex, excluding leased devices, to be $5 billion–$6 billion in fiscal 2018, which will end in March 2019. It doesn’t intend to pause capex as it gets closer to a Sprint–T-Mobile merger regulatory approval.

Combes said, “So sequentially, in the last quarter, we have increased our CapEx investment significantly. You can expect that we will continue to increase sequentially this quarter compared to last quarter.”

By comparison, competitor Verizon (VZ) is forecasting its capex to be $17 billion–$17.8 billion in 2018, while T-Mobile (TMUS) is expecting its cash capex to be $4.9 billion–$5.3 billion, excluding capitalized interest. AT&T (T) is expecting its capex to be ~$25 billion in 2018.