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Sprint: A Stock Worth Watching

June 10, 2014 | About:

Sprint (NYSE:S) reported an adjusted EBITDA of $1.84 billion in the first quarter of fiscal 2014. It was the best performance of the telecommunications company in almost six years. Sprint is, however, facing tough competition from the likes of AT&T (NYSE:T), Verizon (NYSE:VZ) and T-Mobile (NASDAQ:TMUS). Sprint has remained committed to improving the efficiency of its business. Its strategy of bringing more services to its customers is improving its financials. Let’s have a look at whether investors should be interested in the company.


Sprint recorded a net loss of $151 million in the first quarter. But this compares to a net loss of about $1 billion in the last quarter and $652 million in the first quarter of 2013. Its EBITDA represents a growth of 22% compared to the prior year’s first quarter. The company’s operating income of $420 million for the first quarter represents its highest level in over seven years.

Competitors Are Not Sleeping

Sprint’s LTE service has now reached over 225 million people, but the company faces competition from Verizon and AT&T. With its 4G LTE coverage build at a completion stage, Verizon hopes to deliver new services such as VoLTE to grow its revenue. The company signed an agreement to acquire the wireless license of Cincinnati Bell to improve its operations. Sprint is responding through an aggressive network build.

Sprint also needs to look out for the competition from AT&T. AT&T projects to reach 300 million people by the end of 2014 with the unique offerings of its LTE network. The growth of the business makes AT&T a rival to Sprint.

Positive Outlook

Sprint aims to continue improving its operations in the near future. It plans to complete its 3G modernization by mid-year. In addition, it plans to have more voice services on its spectrum across the majority of its footprints by the middle of the year. The company’s Sprint Spark is now available in 24 markets. Sprint plans to continue evolving the enhanced LTE network capabilities of Sprint Spark by expanding its footprints. Also, Sprint and T-Mobile have finally reached a tentative deal over their merger talks. Once the companies join forces, the industry would be blessed with an effective competitor to the duopoly of Verizon and AT&T.

International Expansion

Sprint and Orange Business Services have struck an important partnership. This partnership helps Sprint compete on a global level for its M2M business. Sprint has created New Ventures to deliver models and products. Sprint's international and wholesale partners can leverage Mobile ID to package applications in thematic bundles across a range of categories and utilities.


There is a positive outlook for Sprint in the long term. The company is increasing its 2014 consolidated adjusted EBITDA guidance to between $6.7 billion to $6.9 billion. Sprint plans to invest in its network and add more services to its operations. It aims to take additional costs out of its business this year. To improve its business, it will continue with its network modernization. Investors are advised to put the company on their watch list.

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GuruFocus has detected 4 Warning Signs with Sprint Corp $S.
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