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Sprint Nextel (S), the third-largest U.S. wireless carrier, refused to purchase debt form Clearwire Corp. (CLWR), which is running a risk of defaulting its loan agreements. Sprint shares rose more than 6% on this news.
On December 2, Clearwire announced plans to raise about $1.2 billion in new debt to finance further expansion of Sprint's wireless broadband network. The deadline was January 2, and Clearwire is still in negotiations for fresh funding with new and existing customers including Sprint and T-Mobile, a unit of Germany's Deutsche Telekom AG. Sprint declined to participate in the debt offered by Clearwire.
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Sprint Nextel owns a hefty 54% stake in Clearwire and offers speedy data services to customers via 4G WiMax (a wireless broadband technology) network in collaboration with the latter.
In November, Clearwire raised doubts on its ability to accumulate funds or operate as a “going concern” due to nagging losses, raising worries about Sprint's financial position. After years of struggle, Sprint has narrowed its subscriber losses by using the Clearwire network.The 4G WiMax deployment offers a major prospect in the wireless market that might boost Sprint's revenues.
During the third quarter, Sprint gained approximately 644,000 subscribers, representing 364,000 retail subscribers and 280,000 wholesale and affiliate subscribers in total. This was reportedly the best wireless subscriber growth since 2006.
Sprint's adjusted net loss per share of 18 cents surpassed the Zacks Consensus Estimate by 10 cents. Revenue increased for the first time in three years and was also above the Zacks Consensus Estimate.
Currently, Sprint extends its 4G network in 68 U.S. markets via the Clearwire network. This reach keeps the companywell ahead of its rivals AT&T Inc. (T) and Verizon Communications Inc. (VZ). AT&T plans to roll out its 4G services in mid 2011, and Verizon now has initiated the launch of its 4G services, which are expected to be available in 39 markets.
Although Sprint's 4G deployment is dependent on Clearwire, we believe the former is well positioned to leverage the growing wireless market in the U.S. with its rich portfolio of popular smartphone offerings and more advanced devices in the pipeline.
Consequently, we are currently reiterating our long-term Neutral rating on Sprint supported by the Zacks #3 Rank (Hold).
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.