Sprint Financial Moves Offer Carrier Stability, Analysts Say
Sprint’s announcement Wednesday that it will raise $2.2 billion through use of a Network LeaseCo (see 1604060070) means the carrier likely will have the cash it needs to operate its business and redeem $4.6 billion in debt maturing over the…
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next 18 months, UBS said in a Thursday note to investors. The deal is really just an “over-collateralized” loan, UBS said. Sprint will repay the money during fiscal 2017 “and has the option to repurchase the equipment for $1 at the end of the arrangement,” UBS said. “Similar to future handset LeaseCo arrangements, this tranche will be treated as debt, while the assets remain on the balance sheet, and depreciated over time.” Wells Fargo said in a note the loan means that the carrier will be able to pay $2.3 billion it owes by Dec. 1. Sprint has made clear it plans to raise as much as $5 billion, and existing network equipment, new network equipment and some spectrum will all be part of the equation, Wells Fargo said.