Sprint Signs $1.8B in Vendor Financing Deals

Sprint has raised $1.8 billion in vendor funding from its three main infrastructure suppliers to fund its Spark 4G rollout, the carrier announced Wednesday.

Nokia Networks , Samsung Corp. and Alcatel-Lucent (NYSE: ALU) all chipped in on the financing, which Sprint Corp. (NYSE: S) says it will use to purchase 2.5GHz network equipment and related services from key suppliers. The money, all guaranteed by Sprint, includes $800 million from Nokia, $750 million from Samsung and $250 million from Alcatel-Lucent.

The vendor financing was just part of the financial changes Sprint announced today, detailed here in a press release. The carrier also said Alcatel-Lucent helped it get a $300 million loan from Export Development Canada (EDC), and that it amended the terms of its existing secured equipment credit facility with Ericsson AB (Nasdaq: ERIC), used to finance $1 billion in network equipment purchases and services from the vendor.

The Federal Communications Commission (FCC) has also approved Sprint's request to reduce its 800MHz incumbent reconfiguration costs by $22.6 million, bringing the total to $434 million, down from the original cost of $850 million in early 2014.

For more on wireless topics dedicated mobile content channel here on Light Reading.

Sprint CEO Marcelo Claure is speaking tonight at the Citi conference, where he may elaborate more on the new financing. The carrier has leaned on its vendors for funding before, but there's a heightened drive to accelerate its oft-delayed Spark rollout under SoftBank Corp. 's leadership. The vendor financing is especially notable considering that Softbank certainly has its own deep pockets for Sprint's network buildout efforts. (See Sprint Chases $3B in Vendor Financing and Sprint Must Spend Big to Go Big With 4G.)

"Sprint needs to invest in the 2.5GHz they bought with Clearwire to deliver differentiated services and that will cost billions of dollars," BTIG Research Managing Director Walt Piecyk tells Light Reading. "While it's positive that vendors are willing to finance these purchases, the reality is that SoftBank has plenty of resources to fund this necessary network build."

Sprint had a liquidity position of $8.8 billion, with $5.3 billion in cash, cash equivalents and short-term investments as of September 30, 2014. Its stock was trading up by 0.6% to $4.22 following the announcement Wednesday.

— Sarah Reedy, Senior Editor, Light Reading

mendyk 1/8/2015 | 9:21:21 AM
Re: Caveat lendor This is one way that rich people stay rich -- why put your own money at risk when you can use your resources to get somebody else to front the cash for you. For the vendors, on the surface there's less risk involved with financing this time around because the borrower has some actual collateral. But Mr. Son's personal assets are almost definitely not at risk.
lsutigers 1/8/2015 | 1:10:17 AM
Re: Sprint has to fend off T-mo soon... Sprint has been aggressively rebuilding its entire network from the ground up for the last several years. Unlike the other carriers, for better or worse, Sprint decided to undertake a full gutting of its entire network by replacing all network gear, radios, antennas, cabinets, backhaul to fiber, etc which is a hugely ambitious project. Part of the reason they did it was to reduce expense of operating multiple networks and integrate all of their spectrum holdings into single, multi-mode base stations which are not only state of the art, but much more efficient, environmentally friendly and future proof. Sprint is one of the greenest companies in the U.S. and this fit as part of their strategy. It's competitors instead overlayed and added LTE to their existing legacy equipment which was a much easier and quicker route as in many cases they did not need to apply for permitting from cities, counties and municipalities as Sprint did. The scope of work involved in Sprint's Network Vision project was enormous. Thankfully, most of the rebuild is complete and the majority of towers have been upgraded to the new platform. However, that is only part of the job. Phase 1 of Netwok Vision was completely replacing the CDMA 3G network and adding 1.9ghz LTE. Phase 2 is now underway which involves adding LTE on the 800mhz refarmed Nextel spectrum and adding LTE on the 2.5ghz Clearwire spectrum as part of their tri-band Spark Network strategy. I am currently using Verizon as my personal carrier and a Sprint Spark iPhone 6 provided by my employer. Although Verizon's network is still the largest in the US in terms of coverage, AT&T and Sprint are close seconds, with T-Mobile being way behind in coverage. Additionally. Verizon and Sprint have a mutual roaming agreements which allow them to roam off each other for voice and 3G. As far as LTE, Sprint is still working on their rollout but the coverage gets better every day and with Spark, the speeds beat Verizon XLTE in many cases. At this point I am considering moving my family to Sprint to take advantage of the upgraded network and unlimited data. If you haven't tried Sprint in awhile, you should check out how much better their network is today.
danielcawrey 1/7/2015 | 8:05:04 PM
Re: Caveat lendor I'm not understanding why SoftBank wouldn't just pay for this. Someone is going to get stuck with the bill, and I'm not entirely sure why that would have to be the vendors. I guess this is just another case of creative financing in order to reduce the amount of upfront costs required. 
mhhf1ve 1/7/2015 | 7:11:24 PM
Re: Sprint has to fend off T-mo soon... Ariella, I wouldn't say Sprint is doomed... but it definitely has to pick up its game so that MVNOs using its network aren't doing all the innovation. AT&T and Verizon seem to have nothing to fear from Sprint, but T-mo seems to be pickup up customers at a rate that has the duopolists thinking about responding.
Ariella 1/7/2015 | 5:38:00 PM
Re: Sprint has to fend off T-mo soon... @mhh1ve does that mena you believe Sprint is doomed or that it can use the advantages gained here to build itself up?
mhhf1ve 1/7/2015 | 3:54:01 PM
Sprint has to fend off T-mo soon... I ditched Sprint's service years ago because its coverage wasn't working for me, so maybe some investment in its network will make a difference and boost its reputation. T-mo is gaining users fast to become #3, displacing Sprint in the process.... so Sprint's clock is ticking.... 

mendyk 1/7/2015 | 3:43:12 PM
Caveat lendor Vendor financing -- that hasn't worked out too well for mobile suppliers in the past. Let's hope this time is different.
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