Buying or Being Bought: Sprint

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| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Buying or Being Bought: Sprint

In March, Craig Moffett of Bernstein Research announced that Sprint would end up in bankruptcy. MSN reports, "After assigning a 50% likelihood in March that Sprint would end up in bankruptcy as it raced to build a national wireless network to handle smartphones like the iPhone 5 and compete with stronger carriers -- and citing bond trading prices -- telecom sector bear Craig Moffett of Bernstein Research now says that readily available financing makes that prospect remote. However, amid a 100%-plus stock rise for Sprint in 2012, Moffett says that even if bankruptcy is not a near-term risk for Sprint shareholders, significant risks remain."

Bloomberg writes, "Sprint's stock surged 136 percent for the second-biggest gain in the Standard & Poor's 500 Index as the wireless provider boosted sales with Apple Inc.'s iPhone and began rolling out a faster network. Cash and equivalents stand at almost $6.8 billion after reaching the highest this year since the end of 2005." The debt stands at $21B as of June of this year. This includes debt raised for its network build, to fund Clearwire (its 4G partner for life), and for re-financing debt due in 2013 and 2014.

Sprint is sitting on over $6B in cash, according to Bloomberg. Coupled with easy available financing, Sprint is ready to start acquiring, as indicated by CEO Dan Hesse. Rumor has T-Mobile or MetroPCS. While Leap has a deal with Clearwire, MetroPCS does not (yet). Neither does T-Mobile, who made a spectrum swap with VZW. All this says that T-M or MetroPCS would be good buys for Sprint.

Here's the flip side: Sprint stop is still under $5 and it is sitting on cash - lots of cash. That makes them a takeover target. Nothing says that MetroPCS or T-Mobile can't buy them!

Obviously any move would create a mess. Clearwire and Sprint are entangled. Sprint is still unraveling iDen. We know that Sprint sucks at integration from acquisition! Sprint-Nextel was second only to TW-AOL in bad deals.

Bloomberg gives many reasons for Sprint-MetroPCS, including MetroPCS CEO Roger Linquist admitting that acquisition was possible. However, all that debt Sprint has may prove more of an obstacle than the FCC. Consolidation will be necessary for Leap/Cricket, US Cellular, C Spire, T-Mobile, MetroPCS and Sprint - to compete with the RBOC/cellcos and their stranglehold on the market - subscribers, spectrum and handsets.

One other glitch today: ATT talked the FCC into giving them 20 MHz of 4G spectrum nationwide! "Genachowski on Wednesday began circulating a proposed order among commissioners that, if approved, would give AT&T a free-and-clear 20 MHz of spectrum in the 2.3 GHz Wireless Communications Services (WCS) band for a new LTE network. " ATT is buying up as much 700 MHz, AWS and WCS spectrum it can including NextWave Wireless. This will make it impossible for most of the other carriers to compete long term. VZW and ATT will have the most spectrum. Clearwire with Sprint also has a hefty amount of spectrum. One more reason consolidation is all but required.

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