back to article Cash-strapped Sprint to raise $2.2bn by flogging off its network hardware

Mobile carrier Sprint says it will raise $2.2bn by selling and then re-lease its own network hardware. The SoftBank-owned US telco said it will use money from the sale to return to profitability by providing a much-needed infusion of cash, as it works to turn around a business that had become a cash sink. "Sprint and SoftBank …

  1. Youngone Silver badge

    Pardon?

    How the hell is Sprint not minting money? It sounds like woeful mismanagement to me, and this sell and lease arrangement will be a deckchairs on the Titanic type disaster.

    1. MondoMan
      Pint

      Re: Pardon?

      @youngone

      Sprint is in 4th place out of 4 major cell carriers in the US, and for a long time now has been running a promotion where customers of the other 3 companies can switch over to Sprint, pay only 1/2 the monthly plan price they were paying, have their old phone and multi-hundred dollar switching charges paid off by Sprint, and also get a good price on a new Sprint phone. Thus Sprint has to pay out many hundreds of dollars for each such new customer, and only gets half the normal monthly revenue from them until(if) they decide to switch to a different Sprint plan.

      Big payouts up front for possible profits years in the future...

    2. Charlie Clark Silver badge
      Stop

      Re: Pardon?

      How the hell is Sprint not minting money?

      While cashflow might be positive, Sprint is heavily in debt due to: the NextTel buy; betting on WiMAX and subsequent retooling for LTE; being bought by Softbank. Betting on the wrong technology also means that Sprint has to offer better deals, with lower margins, to gain marketshare.

      Some debts are coming to maturity and there isn't enough cash to repay them. In this situation sell-and-leaseback looks like the best option because Softbank's own highly leveraged position makes bonds unattractive to investors.

  2. Kevin McMurtrie Silver badge
    Devil

    Lease?

    Wouldn't a reverse mortgage be simpler?

  3. Wade Burchette

    Kicking the can down the road

    Sprint has tried everything EXCEPT a better cellular network and better customer service. I see ads on TV all the time about Sprint cutting my Verizon or AT&T bill in half. I rather pay more for a mobile phone that works and doesn't drop calls. Sprint has yet to understand that important concept. Until they do, they will still bleed cash. This is just delaying the inevitable.

  4. Rampant Spaniel

    Sprint has suffered from years of epic mismanagement. From the disastrous Nextel merger in 2005 onwards. That meter gave them the low band spectrum they needed but it had only really started to be deployed in the past 3 years. The deployed wimax which was a misstep (although they had a build out deadline which left them no choice). They have constantly promised the moon only to deliver so late that they have already been outdone by even tmobile.

    They have huge Hugh band spectrum reserves but needed to basically rebuild their entire network to take advantage of them. This frequently involved purchasing fiber from either their competitors or suppliers which get a lot more money from their competitors. Things weren't quick which didn't help. Their network was caught out by the jump in data demand and their response was slow and badly executed.

    They could have done a lot, they had a great reputation which they seem to have pissed away. They are finally delivering on their promises which is good. The problem is they are not in great financial shape and their new owner could drop some dollar love on them but seems hesitant to. Sadly their future is unclear, I'm hoping their lead a great turnaround. The money massaging is either presale moves or the start of a significant assault on the industry.

    Hopefully their new CEO has cleaned house enough as they have been pathetic for a decade.

  5. James O'Shea

    Buh-bye, Sprint

    I am an ex-Sprint victim... ah, 'customer'. For more than five years I stuck with them. They promised better speed. They did not deliver. They promised better service. They did not deliver. What did they deliver? Extra ways to annoy me, that's what they delivered.

    Note that I have two phones: my personal phone, on T-Mobile for the last nine-plus years, and the work phone, now on AT&T, formerly on Sprint. Both phones are now nice shiny new iPhone SEs; I used to have a 5c on T-Mobile and a 5s on Sprint.

    Sprint at five dots of LTE (that's me literally standing in front of the cell tower...) delivers slower speeds, upload and download, than T-Mobile with two dots of LTE. I have never got better than 6 Mb/s download and 2.5 upload with Sprint, (note that I didn't get those two maxima at the same time...) I typically get 8-10 Mb/s download and 3 Mb/s upload with two dots of T-Mobile. The max I've got with T-Mobile is over 30 Mb/s down and 12 up. T-Mobile's not Earth-shakingly fast, and it wasn't that long ago when they were as bad or worse than Sprint, but unlike Sprint they've delivered on their promises.

    I have a tablet, a iPad Air, with T-Mobile. The two of them, together, cost less than ten dollars a month more than just the one phone on Sprint. AT&T is also notably cheaper than Sprint. Let that sink in a little: Ma Bloody Bell is cheaper than Sprint, unless you're transferring from AT&T to Sprint, and even then it's not for long.

    I have not paid an activation fee with T-Mobile since the very first time I set up a phone with them, despite going through several phones over the years, including flip-phones, an Android that didn't last long, and two iPhones. AT&T waived the activation fee for the iPhone SE. In comparison, Sprint insisted on charging me an activation fee for both phones I set up with them, despite the fact that I got the second phone direct from Apple myself. They insisted that if I got a third phone with them there'd be another activation fee. So I didn't activate one with them.

    They're slow, they're expensive, and they're stupid. And they've lost one more customer.

    1. MondoMan

      Re: Buh-bye, Sprint

      Yep, I was a longtime Sprint customer until switching over to T-Mobile about 5 years ago. It was a revelation -- data fast enough to be useful! Even when I had WiMax signal under Sprint, there was plenty of lag and waiting.

  6. Youngone Silver badge

    Thanks Commentards!

    I asked the question above: Why is Sprint not making any money?

    The commentards delivered with the expected answer: Because the guys who run it have no clue what they're doing.

    Poor network, poor customer service, pointless fees, dumb half price promotions.

    Management failure, I knew it.

  7. paulf
    Alert

    Profitability

    So the plan is:

    Sell Network kit.

    Lease back Network kit (we can't do much without it)

    ???

    Profit!

    It's one thing to securitise existing business assets to fund expansion or an important capital project but if the only way you can book a profit is by selling a vital asset and turning it into an ongoing liability; well, I think the phrase is, "You're fucked".

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