http://online.wsj.com/article/SB10001424053111904823804576500713153673324.html?mod=WSJ_Tech_LEFTTopNews
Cash is tight all over and it has been tight all over for Sprint since before Dan Hesse took over. Is it tighter now then it was back then? Yes. Is the company in better shape than it was back in 2007? Yes.
Let us take a step back and let us look at this in context. Sprint has stopped the customer losses. Sprint has a network roadmap. Sprint has a business plan. Sprint has alliances with companies like Google, Comcast, Time Warner, etc. Sprint is now leading the fastest growing segment in telecom; the prepaid sector. Sprint has a 3G plan and a 4G plan. Oh and Sprint is leading the way in prepaid.
Does Sprint have to spend money to build the network? Yes.
Now here is the thing the analysts are failing to tell everyone. Carriers always plan 2 to 4 years ahead for growth and evolution. In other words, the money has been budgeted for the last few years. I cannot think of a time in 30 years when a carrier did not have money (and I am talking about billions of dollars) in a budget to buildout and evolve the network in a relatively short period of time. I bet Sprint had the money to buildout the 4G network in the budget a couple of years ago. But now it’s a problem?
I am not saying money is cheap now. Getting money for a build will be expensive, however, that does not mean investors should be running for the hills.
The analysts want to give you the impression that wireless carriers must have 4G fully deployed and providing services to all customers throughout their respective networks in the next few years.
What are the chances of any of the other carriers like Verizon Wireless or AT&T Mobility will be fully 100% deployed with 4G and providing it to every customer in every part of their territories in 3 years or less? Slim to none? I think so; slim to none.
In the late 1990s, 3G was supposed to have been fully deployed. By 2000, 3G was supposed to be fully deployed. By the mid-2000s, 3G was supposed to be fully deployed. By 2007 or 2008, 3G was not fully deployed by every carrier but it was fully deployed by one carrier (I think). By 2011, there are still customers who claim they do not have 3G service but the carriers claim they are providing it to all of their customers. Why it only took, 15 years.
Does 4G need to be fully deployed? I would say it would be nice to deploy it everywhere all at once but no CTO in their right mind would deploy en masse without a supportable revenue plan they can hold their counterparts in sales and marketing accountable for.
By the way, in 30 years I have never seen a network deployed with a single technology en masse in a short period of time. Technology is deployed in stages, it is called a smart build. The term “smart build” is a catch phrase Wall Street analysts were using in the late 1990s when CTOs discovered that the term “growth plan” was not cool enough for the Street.
Now I am not saying Sprint’s debt load is low. I am saying Sprint is a company that is well run and is nowhere near the condition it was in 4 years ago.
Will Sprint be spending a lot of its free cashflow building out the 4G network? Probably and so what?
Please, I have had enough of the naysayers who proclaimed Sprint dead and buried when Dan Hesse took over. If stockbrokers had their way 4 years ago, they would have sold off Sprint (lost thousands of jobs) and made a fortune in M&A fees.
Running a carrier’s network is about skill, guts, and knowledge. Running a carrier is about skill, guts, and knowledge.