Analysts have concluded that US mobile operator Sprint Nextel faces “significant pressure” in its funding position, as it faces a bill of US$10bn of capex for its rollout of LTE.
In a report today, the Morgan Stanley analyst Simon Flannery said:…
Analysts have concluded that US mobile operator Sprint Nextel faces “significant pressure” in its funding position, as it faces a bill of US$10bn of capex for its rollout of LTE.
In a report today, the Morgan Stanley analyst Simon Flannery said: “Although we believe the LTE rollout is a good decision, the $10bn of capex will create significant pressure to the firm’s funding position.”
Flannery also noted that Sprint’s plan to decommission its iDEN technology by mid-2013 may drive higher churn for Sprint.
Credit Suisse’s Jonathan Chaplin also expressed some concerns.
He said that “Sprint still appears compelling” after adjusting for capex changes, but added “the increase in capex will heighten funding concerns”.
The negative reaction follows Sprint’s announcement on Friday of its plans to roll out a LTE network from mid-2012 onwards.
It plans to roll out LTE on its 1,900MHz spectrum and expects the process to be completed by the end of 2013.
Up to this point, Sprint’s only 4G involvement has been its investment in the WiMAX wholesaler Clearwire, in which it holds a 54% stake.
According to the Financial Times, Sprint’s CFO Joseph Euteneur said that his company would have to raise additional capital in order to fund the US$10bn capex.
