Sprint (NYSE:S), the number four US wireless carrier, has announced that it will not take part in next year’s incentive spectrum auction, saying it has decided its existing airwaves are sufficient.
Sprint (NYSE:S), the number four US wireless carrier, has announced that it will not take part in next year’s incentive spectrum auction, saying it has decided its existing airwaves are sufficient.
Sprint is so far the only operator to declare it will not participate in the auction of 600 MHz broadcast TV airwaves, which the FCC has scheduled for late March 2016.
“Sprint’s focus and overarching imperative must be on improving its network and market position in the immediate term so we can remain a powerful force in fostering competition, consumer benefits and innovation in the wireless broadband world,” said Sprint CEO Marcelo Claure.
Sprint’s latest financial results showed it had slipped behind T-Mobile US to become the smallest national wireless player in terms of subscribers. Its cash burn rate – US$2.2bn in Q2 – has also concerned investors. Both Sprint and T-Mobile have struggled to compete with heavyweights AT&T and Verizon, and have often been tipped as takeover targets.
Last week, both Claure and T-Mobile CFO Braxton Carter indicated that they see fixed and mobile convergence as driving future M&A deals.
Claure was cited saying he thinks Sprint would become “a stronger and more formidable competitor” if it merged with a cableco, while Carter told TelecomFinance that cablecos are likely to target mobile deals to create a more ubiquitous footprint.
Sprint is currently working to boost its coverage and capacity by densifying its network and increasing its number of cell sites using existing spectrum.
Wells Fargo analyst Jennifer Fritzsche said she considers the move “somewhat positive” for Sprint as it shows the company has the confidence in its network plan to sit out the auction.
She sees it as “very positive” for T-Mobile as it should face significantly less competition for the 30 MHz of spectrum reserved for smaller players. T-Mobile, AT&T and Verizon have said they will take part.
Sprint believes it has enough 800 MHz spectrum to meet its low-band needs, she said.
“Additionally, the company is already undertaking a heavy lifting initiative to offer a tri-band solution using the high (2.5 GHz), mid (1.9 GHz) and low band (800 MHz) spectrum it has in its portfolio,” she said.
While some have argued that Sprint needs more low-band spectrum, Fritzsche said not participating in the auction at least allays concerns about how it would finance it.
“Sprint has to show continued momentum in its network improvements in order to fight the bear thesis,” she said. We believe it can do this as it realises the benefit of triband coverage … of the phones and network.”
