Sprint Promises Mobile 5G in H1 2019, Signals More Job Cuts

Dan Jones
News Analysis
Dan Jones, Mobile Editor
2/2/2018



Sprint is bumping up its network capital expenditure by at least $1 billion for the coming year as it promised Friday morning to deliver mobile 5G in the first half of 2019.

Sprint Corp. (NYSE: S) announced its mobile 5G plans during its fiscal third-quarter 2017 earnings call Friday morning. "We're working with Qualcomm [and others] in order to deliver the first truly mobile 5G network in the US in the first half of 2019," CEO Marcello Claure said on the call. (See Sprint Says No to mmWave, Yes to Mobile 5G.)

The CEO says that Sprint will be able to deploy mobile 5G nationwide on 2.5GHz band in 100MHz channels. "We have the spectrum to lead on 5G, and basically lead in a different way," Claure said.

Claure said later in the question and answer session that Sprint had a commitment from a "leading Korean" device vendor that it will have a 5G device ready within its 2019 timeframe. (See Qualcomm Sets Out Its 5G Stall for 2018.)

All this will mean a bump up in capital expenditure spending on the network for fiscal 2018 for Sprint, new CFO Michel Combes said. Sprint's total capex spending for fiscal 2017 will be in the $3.5-$4 billion range. Capex will hit $5-$6 billion in fiscal 2018, which starts in April 2018.

Sprint will spend to increase the number macro cell sites by 20%, and support its 2.5GHz, 1900MHz, and 850MHz bands on nearly all of its existing macro sites. Currently, around half of its macro sites have tri-band support.

The CEO added that Sprint plans to deploy more than 40,000 outdoor small cells, and "more than 1 million Magic Boxes," the wireless small cells that it uses to improve in-home coverage.

In the field, Sprint expects to update sites with multiple-antenna array hardware, or "Massive MIMO" in 2018. "Massive MIMO will serve as Sprint's bridge to 5G," Claure said. (See Sprint Says No to mmWave, Yes to Mobile 5G.)

This is because the MIMO hardware can be updated to 5G NR standard over-the-air, the CEO said.

Sprint will also leverage its partnerships with Altice and Cox Communications Inc. to expand its backhaul capabilities for LTE-Advanced and 5G. Sprint CTO John Saw chimed in briefly on the call to say that some of the capex spend could be on "dark fiber" for backhaul needs. (See Sprint, Cox Go From Patent Suit to Partnership and Altice & Sprint Ink MVNO Deal.)

Against this backdrop, Claure said there would be continuing job cuts at Sprint, including at the executive level, aiming for "a leaner and more agile company across our non-customer-facing workforce." Sprint has cut thousands of jobs during the past couple of years. (See Sprint to Take $2B Shave and Sprint, Verizon Face Reorganization, Job Cuts.)

True to his reputation as a "turnaround specialist," new CFO Michel Combes said he is looking at more ways to "decrease cost structures" at Sprint. He promised to reveal more details in the March quarter. (See Sprint Appoints Ex-AlcaLu Boss Combes as CFO.)

For the quarter, Sprint reported revenue of $8.24 billion, down from $8.55 billion a year ago. Net income for the quarter was $7.16 billion (or $1.76 per share) thanks almost entirely to tax reform gains of about $7.1 billion, compared with a net loss of $479 million a year ago.

Sprint shares are trading up $0.22 -- or 4.22% -- at $5.36 in Friday trading.

— Dan Jones, Mobile Editor, Light Reading

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