1. I-phone's up-front costs will require $billions
before sprint gets any critical mass from
I-phone subscriptions. The majority of those
subs will come from existing subscribers so the
cannabalization factor will be significant.
2. Network Vision will end up requiring over $5
billion in new borrowings. Credit agency down-
grades to B or B- will shoot the cost of debt
well over 12% interest and hammer sprint's
3. Sprint must somehow juggle an I-phone induced
surge in spectrum utilization with the need to
free up anything more than a sliver of channel
breadth for LTE. They'll have to get bandwidth
from somewhere now that they've abandoned
spectrum-rich clearwire and it'll cost them
money they don't have to acquire it.
4. Clearwire's 4G network has been Sprint's only
growth driver until now. By telling the world
that clearwire's 4G will be history, they're
essentially shutting down that growth engine in
favor of a high-cost, spectrum-hogging I-phone
wing and a prayer.
5. Sprint's only positive offering is the "promise
of savings from network vision... which is
offered up as though Verizon and AT&T aren't
going to be upgrading and improving during the
years it'll take sprint to do nothing more than
match their cost structures under the very
rosiest of scenarios.
Sprint's only possible avenue for success was to make a cheap, $600 million upgrade to Clearwire with TD-LTE at 90mhz speeds and build network vision off of that foundation...
... now that Sprint has dissed Clearwire, look for Clearwire to start seeking value for it's immense assets... which will probably under-cut sprint's reliance on Clearwire's WiMax network long before Sprint can under-cut Clearwire's subscriber revenues.
... they aren't going to have the dough to redeem them if they're spending every penny they have on duplicating Clearwire's POPS...
... which means not only is their future B- credit rating going to drive the cost of their new junk bonds over 12% interest expense...
... it also means that their existing 7% bonds that mature next year will have to be rolled-over at 12% as well... if they can even find buyers in this market.
The interest costs alone will eliminate their ability to compete with Verizon with discounted subscriptions. Sprint could likely be carrying as much as $25 billion in junk-bond debt 2 years from today and like Greece, they could be issuing debt just to cover interest on the debt.
Even today, how many years has it been since sprint last made a profit?
Question is what if any laws does Sprint break if they talk Clearwire down to a $1 or 50 cents a share and then back off their "go it my way with Vision Network" and instead make a take over move for Clearwire. This would be pure out and out manipulation on Sprint's part to destroy the value of a company (that it owns 54% of) specifically for the benefit of Sprint.
As Spok says, Sprint going forward with it Vision Network plan is a non-starter simply because at the end of the day Sprint will not have the spectrum to compete with Verizon or AT&T.
Its as if Sprint is a boat heading in the direction of niagara falls. Sprint owns the boat but the boat's captain is Clearwire.
About a mile or two away from niagara falls, the Clearwire captain says we need to turn around and gun the engine (or give us 600 million) and we are out of here heading for calm waters. But Sprint says, "screw you Captain Clearwire. We are taking control of this boat and not changing course. We're heading straight for niagara falls.
Guess we find out in a few weeks, or months if the good ship "Sprint" goes over the falls and everyone dies, or if by some miracle Sprint comes to its senses and lets Clearwrie back at the boat controls.
"Sprint is playing catch up, with half the spectrum of AT&T and VZW, a fraction
of the scale and much fewer financial resources to remedy the situation. Even
after the announcement today, the gap between Sprint and Verizon/AT&T in the
4G world will be dramatically larger than the existing 3G gap. This bodes poorly
for subscriber growth as the market shifts to 4G. It also casts doubt on Sprint’s
ability to achieve the longer term margins it hopes to achieve"
... He pretty much makes my point. It's a vortex.
good points, Spok, however, Teamrep's response to "other options" unless, i'm not reading it correct, it's going to be difficult for clwr with these "other options".
maybe you can give better understanding.