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Thread: Could Sprint go Bankrupt????

  1. #241
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    Quote Originally Posted by offthegrid View Post
    When T-Mobile bought the Verizon spectrum DT bailed them out by issuing new stock that diluted shareholder value. DT's ownership went from 74% to 66% and that gave them the money to buy that spectrum. DT also ate $4 billion in debt that would have been on Tmo's books when they merged with Metropcs. Add about $6 billion in debt to Tmo without those two DT bailouts. Is keeping costs low mean putting those costs on the parent company's books?

    DT has stated they won't do that again which is why Tmo says they won't be going full boat in the 600 auction - something they may find necessary now that Comcast has registered for that auction as Comcast owns no low frequency spectrum making them eligible to bid against Tmo in the set aside auction. Tmobile could come away with zip from the auction if Comcast is serious. Comcast knows Tmobile has limited funds to bid with.
    Comcast doesn't have unlimited funds either. Additionally, it's great if comcast goes into this auction, but if they truly want to buy nationwide for some network - what is their plan to have additional spectrum? Are they going to launch a network with 10+10mhz? I know there are plans to use much higher frequencies and such for 5G and all that, but they seriously can't just buy some 600mhz and go with that.

    Also, Tmobile is rumored to want to use up to 10 billion. That's not some paltry amount. Given the last auction for AWS-3 was around 40ish billion, that would make Tmobile a top bidder in this auction. Next, why does it seem like the opinion is if Tmobile doesn't walk away with every sliver of spectrum for this 600mhz, they are an automatic loser? You buy spectrum where you need it most, you balance the costs with your network needs and future growth. If they already own a 700A, a bunch of PCS and AWS in the boonies of North Dakota, they really won't need to pick up 600mhz there either unless ND is going to see millions of new residents.

    Lastly, Tmobile is actively seeking more 700A when they can and still does spectrum swaps recently with VZW or ATT to ensure they have better spectrum positioning. They are looking to acquire what can be used today. Don't think I'm advocating they can just ignore or go halfway at the 600mhz auction, just pointing out Tmobile is doing what it can today and hopefully for the future to make a good network. Sprint's possibly going to go bankrupt because they have a shoddy network that hasn't been helped by sitting out multiple auctions and sitting this one out too.

    Quote Originally Posted by jet1000 View Post
    Your facts are wrong. TMUS issued the stock not DT:

    http://www.fiercewireless.com/story/...ses/2014-12-09

    So it was not a bail out by DT as you claim.



    They didn't eat $4 billion in debt as you claim either. T-Mobile USA was a wholly owned subsidiary of DT at the time of the merger. How much the child company owes the parent company is completely arbitrary. You can make it whatever number you want. Like you could say, T-Mobile USA owes us $2 billion a year for licensing the T-Mobile name. Who's to argue?

    Anyway, the real information is that during the merger, DT tried to put over $15 billion in debt that the new merged company would be responsible for paying back to DT. Since DT had lost out on the $25 billion cash they would've gotten from the AT&T deal, they were still trying to get what they could. Major MetroPCS shareholders said no to the $15 billion but they said yes to $11 billion. So DT made out with $11 billion owed to them by the new TMUS and they still owned their majority stake too. They actually loaded debt on...not took it away.

    http://www.law360.com/articles/43218...-t-mobile-deal

    So it wasn't a $4 billion bailout. Just DT maximizing what they could get for the deal.
    Exactly, DT made a great business move with getting Metro merged with Tmo. It wasn't the best option, to them, that selling to ATT would have been, but they got some of the goal with that. Plus, they get to keep Tmo which is bringing in money every quarter. Most businesses that have positive cash flow aren't generally in talks of going bankrupt, unlike a certain carrier...

  2. #242
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    "Sprint Entangled in High-Yield Debt Mess; Shares and Debt Tank" - thestreet.com

    "It appears Sprint (S) is becoming even further entangled in its network of high-yield debt.

    Two tranches of its non-investment-grade bonds were among the most actively traded Monday, dropping more than 3% in secondary trading, while shares plummeted 11%.

    Sprint's roughly $2.5 billion of high-yield bonds maturing in 2028, paying nearly 7% in annual interest, are rated Caa1 by Moody's, and traded down more than 3% Monday to just under $0.61 on the dollar, according to bond tracking service Trace, a division of the Financial Industry Regulatory Authority.(The tranche's credit rating is seven notches below investment grade.)

    What's holding the Overland Park, Kan.-based telecom giant down (as opposed to peers such as Verizon (VZ) and AT&T (T), which traded fairly flat on the day) was reiterated in a recent credit downgrade by Standard & Poors.

    And it now appears the reality is beginning to set in.

    As Real Money reported, S&P downgraded its already sub-investment-grade bonds one notch last week to "B," citing an inability to grow its subscriber base. Shareholders reacted slowly to the news, with equities rebounding from the downgrade quickly, despite analyst cautions.

    Sprint now touts about $34 billion of debt, and booked a $1.4 billion loss over the last four reported quarters. Meanwhile free cash flow, a metric used to gauge a firm's ability to repay debt, was negative over the period, at an aggregate of more than $4 billion in the red.

    "The downgrade reflects our view that Sprint will be challenged to profitably grow its subscriber base and reverse negative free operating cash flow trends sufficiently to improve its longer-term liquidity position in the face of intense competition and mature market conditions in the U.S. wireless industry," according to the S&P report led by Allyn Arden.

    Shares are down roughly 30% year to date, vs. 10% and 8% gains at Verizon and AT&T, respectively."

    http://realmoney.thestreet.com/artic...-and-debt-tank

  3. #243
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    Quote Originally Posted by Morphling27 View Post
    Also, Tmobile is rumored to want to use up to 10 billion. That's not some paltry amount.
    Ha - that's more than the market cap of Sprint.

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    I just read they plan on selling part of their spectrum then leasing it back
    Sprint Plots $3.5B Spectrum Sale/Lease-Back

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