you're not going to see margins as impacted as the basher bozos think, several factors:
1) savings from Network Vision in backhaul, roaming, maintenance, electricity
2) SG&A savings as per cost cuts previously announced
3) I suspect there is less ad spend, given that "half-price" is buzz-worthy enough that the word gets out
4) Brightstar as an SB company offering sweetheart deals for Sprint on phone leasing, financing, phone buybacks, is a "hidden" pricing advantage and basically subsidizes Sprint
5) Any customers Sprint gets is revenue it didn't have, right now it's about economies of scale, the fixed costs basically covered, any additional revenue is essentially profit.
part of this story is the increased recognition of spectrum as a hard asset, one that is constantly increasing in value...believe it or not some of the clueless posters here not long ago were posting that all spectrum depreciates in value.....utterly clueless
you are correct whigg, the TMUS short interest is UP percentagewise way more than Sprint...yet Sprint gets the hit piece......here's the Sprint short interest, as you can see it is down from 117 Mil since September, shorts have been aggressively covering, some of which was above $6... bashers here and shill authors need to find both a calculator and a clue
this is just one way the extreme trapped value in Sprint is freed, Sprint can do it organically as well....but this would be swift, as in wake up one morning and the stock is at $15......eerily similar to LEAP...also held by Paulson.....shorts were covering there at a buck above the buyout price of $15....
.....eerily similar because LEAP was also taking a drubbing in the media....as in please steer clear of this...bad bad......next day price is 3x...LOL .....
hi whigg, yes, no mention in that article that short interest is DOWN almost 50% since September, typical hit piece by a shill author, as you mentioned...also, most people have no clue how to read short interest, which you can see on this board here......
The simple story:
Network is improving daily, note 100 engineers and top tech rep in from Softbank
Cost cuts are going in, 1.5 Billion
Also big savings from NV re backhaul, roaming, maintenance, electricity, not running two networks
Brightstar sweetheart deals regarding phones, buybacks, phone financing, leasing...ie Brightstar is an SB company, note CFO comments at recent conference
41 Billion dollars is the value of Sprint Spectrum (as per balance sheet), it's arguably worth much more
18 Billion dollars is the network value (see balance sheet), arguably worth much more
5 Billion in cash
31 Billion in debt
So, 64 Billion in assets, 31 Billion in debt, 33 Billion net and market cap is....16 Billion?...oh, and wait we assigned no value for the 55 Million paying customers creating 8.5 Billion in revenue per quarter.
This is significant TRAPPED VALUE.......Sprint pays a premium for the debt because of perceived operational risk, and the operational risk is perceived high due to the debt......it's goofball.....hence the efficacy of a different structure such as a REIT, see The COOPERMAN Question which covers this in details and walks through to 20.00+ in share value...I've not heard one reasoned argument refuting this......
a REIT as per the Windstream IRS private letter ruling, now reality at Windstream, likely to be evaluated by other telecoms including AT&T and VZ.....see media Windstream REIT
The more I look the more sense for Sprint:
1) Sprint spins off network and spectrum to a reit (60 billion dollars, as per Sprint balance sheet)
2) Dish contributes spectrum to the reit (perhaps 40 Billion dollars) becomes major partner in reit
3) Along with the assets Sprint debt also moves to the reit (31 billion)
4) Sprint and Dish shareholders get ownership in the reit (good for Ergen, good for Son, good for all)
5) Sprint leases use of reit (improved cash flow)
6) Dish leases use of the reit (Dish spectrum into use, lower cost for network access)
7) reit refinances debt at lower cost, backed by hard assets, raises cash via IPO for more spectrum investment
8) reit open to other partners who need access/spectrum such as Google, Lightsquared, MVNO's, VZ, AT&T
9) reit pays out 90% of income via dividend (attractive for investors)
10) reit trades, buys and sells spectrum for most efficient use, source of asset appreciation
11) Sprint is now debt free, has better cash flow, and including other announced cuts, is very profitable
The key to this is the UNLOCK of value. As currently configured debt costs Sprint about 2 Billion dollars a year. Allowing of course for other considerations, the cost of the debt is high due to operational risk, and the operational risk is high due to the debt. A catch 22. The reit removes the catch 22 and leaves a debt free Sprint, with much better cash flow, and profitable.
When you think about it, how inefficient this is - you have about 65 Billion in assets (spectrum, network, cash) AND 8.5 Billion in quarterly revenue and yet the debt is at costly rates......one or the other could back that debt in an efficient structure.
Can this be accomplished elsewise, yes, but the reit structure is immediate, powerful, elegant, value creation to $20 per share
wrapping it up in post 7, random reader quote...."while others parrot absolute nonsense, The Cooperman Question delivers the goods in this hard hitting no-nonsense series of 7 posts".....
post 6 is a summary and points to the tremendous value unlock available in such a structure.....random reader comment..."makes perfect sense"
post 5 paints a broad picture of applicability to Sprint based on the Windstream model.....random reader comment...."wow"
more reasons it makes sense, note the post reit structure absolutely would appear to open the door to a TMUS/Sprint tie up......random reader quote on reading post 4...."Greek does it again, brilliant "
post 2 of the Cooperman question notes information on the Windstream reit.....
look at this from credit Suisse:
Other telcos will evaluate REIT spin off, but no rush. We believe AT&T
and Verizon are evaluating a similar strategy, but have the advantage of
waiting to see how the Windstream transition plays out. Given the RBOCs'
strong balance sheets and solid operational performance, there's less
pressure to implement such a strategy immediately.
The more I look at this reit structure, it makes all the sense in the world for both Sprint and Dish, as well as the industry in general.....that is would result in unlocking Sprint value to the tune of about $20 a share......might explain why bashers and shills are SO busy bashing Sprint and pumping TMUS...as noted it you take Spectrum plus network plus cash less debt, you get $8.25 per share....and that really gives no value for the ongoing enterprise with 55 Million customers......
so yes, the current valuation is ludicrous, media and analyst bashing is disingenuous and eye-brow raising at the least......a serious value unlock is coming one way or another....
Note this as reported in Fierce telecom:
Financial analysts said that while other large telcos like AT&T (NYSE: T) and Verizon (NYSE: VZ) could look at a REIT spinoff, it would likely be more complex.
Credit Suisse said in a report that although AT&T and Verizon are looking at a similar structure, it would not likely happen in the near-term.
"We believe AT&T and Verizon are evaluating a similar strategy, but have the advantage of waiting to see how the Windstream transition plays out," wrote Credit Suisse in a report. "Given the RBOCs' strong balance sheets and solid operational performance, there's less pressure to implement such a strategy immediately."