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Is Sprint the Right Choice for Your Portfolio?

July 05, 2014 | About:
Suravi Thacker

Suravi Thacker

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Sprint (S) has been a lot in the limelight recently because of its intention to acquire T-Mobile (TMUS) which is expected to bring in a host of benefits. The deal is expected to be made at a price of $32 billion. This is not the first time that Sprint has shown interest to acquire a company in order to expand its presence. It has made a number of acquisitions earlier.

Further, Sprint is not the only wireless player which has resorted to acquisition strategy. Even peers such as Verizon (VZ) and AT&T (T) had adopted a similar strategy to succeed. AT&T had acquired companies such as Centennial, Cingular Wireless, Cellular One and NextWave in order to strengthen its position. The most recent purchase was that of Leap Wireless which was acquired for a price of $1.2 billion. Even Verizon had acquired small companies such as Rural Cellular, SureWest, GTE Wireless and West Virginia Wireless.

Recent performance

Sprint has been performing well, as indicated by its numbers in the latest quarter. Its earnings improved 77% to $151 million over last year’s quarter. This growth was due to increase in adjusted EBITDA of 22%.

Sprint also added new customers during the quarter. Gross additions to its post-paid platform grew 16% over the prior year. However, the company is experiencing loss mainly because of the network overhaul which led to a lower quality of services. Hence, people switched to other networks and churn levels increased.

Nonetheless, Sprint added a total of 212,000 of wholesale and affiliate customers during the quarter, which helped it to perform well. Also, its 4G LTE coverage is made available to 225 million people and is further expected to reach 250 million people by the middle of this year.

Some key initiatives

Sprint new pricing program, called Sprint Family, is doing very well. It has a total of 3 million customers already and is expected to grow even bigger as the company expands it into new distribution channels. One of the best points about the program is it allows people to have their own group plans with their friends and family, according to their needs and specifications.

Also, Sprint Spark is being expanded into new regions. It has been launched in 6 new markets and the total number of markets it caters to stand at 24. In fact, Sprint Spark is also available in the latest devices such as HTC One (M8) and Galaxy S5. Moreover, the company plans to enhance the reach of Sprint Spark to 100 cities in America, over the next 3 years.

Additionally, Sprint launched its new online ConnectED application and information portal for the White House ConnectED initiative. This initiative allows educational institutions to have up to four years of hi-speed wireless broadband connection for off-campus digital learning for the students. This initiative is in addition to 4G LTE agreements signed with 12 rural and regional network carriers. This agreement will expand Sprint’s 4G LTE roaming to a population of 34 million.

The takeaway

Sprint is making all the efforts to win the second position in the wireless industry. After posting a good quarter, its efforts into expanding its broadband looks interesting. Also, its new Family program and Sprint Spark should act as revenue drivers. Moreover, the acquisition of T-Mobile will add to its top line as well as reduce operating costs. Hence, investors should watch this stock closely and wait for the right opportunity to get into it.


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