Over the past few weeks I have been watching the developments of the telecommunications industry, which has provided an excellent opportunity to search for investment stocks in this sector. One company I think is very interesting to analyze is Sprint Corp Series 1(S). While there are many different factors to consider when investing, in the article below I will look at the debt side of the company. I will analyze Sprint's debt ratios and what analysts and other top investors think about the company, which should give us an idea of the company’s leverage and how much to expect in return for investing in it over the long term.
As the third largest mobile carrier in the U.S., Sprint serves 47 million customers directly and another 8 million via affiliates. However, the recent years have proven difficult for the firm, with its postpaid market share plummeting from an initial 21% to 14%. Competing against AT&T Inc. (T) and Verizon Communications Inc. (VZ), the firm’s postpaid base was 75% of the size of these rivals in 2007, but now it’s only half as big. Although the carrier has recovered somewhat from 2009’s historical low point, it still has a long way to go. In the hopes of expanding its scale, Sprint acquired Clearwire in July 2013, and is now undergoing a network modernization project, in order to integrate the purchase and rebuild momentum. Although this measure is surely necessary to keep growing, Sprint’s position as the most leveraged U.S. mobile carrier makes it particularly vulnerable to any errors. Continue Reading »