Sprint Mulling 2.5GHz Monetization Opps

Sprint is beginning to consider ways to monetize its valuable 2.5GHz spectrum holdings, encouraged by the wild success of the FCC's AWS spectrum.

Speaking at the Citi conference this week, Sprint Corp. (NYSE: S) CEO Marcelo Claure said it was still very preliminary, but the carrier is open to monetizing its spectrum holdings in the 2.5GHz bands even as it continues to deploy Spark on the LTE frequencies. It wasn't something the CEO had considered in the past, but given that the Federal Communications Commission (FCC) 's AWS auction is now up to $44.6 million in bids, he's taking another look. (See FCC Mid-Band Auction Nears $45B in Bids.)

"If you analyze new technology, which is LTE-TDD carrier aggregation, and what it's capable of doing with coverage and how it makes 2.5GHz feel like 1.9 GHz, you can see the value of Sprint as it relates to spectrum holdings we have," Claure explained.

The carrier just secured $1.8 billion in vendor financing to further its deployment of LTE in the 2.5GHz bands, but it also has more spectrum on hand from its former WiMax partner Clearwire than any other operator. Claure said he's open to selling off the spectrum as a form of future financing and has had interest from companies looking to purchase it. (See Sprint Signs $1.8B in Vendor Financing Deals and Sprint Turns Up 16 More 2.5GHz Markets.)

"When you look at the tremendous spectrum depth we have on 2.5, we say there could be tremendous value here," Claure said. "We have so much, you start asking yourself, 'Is it worth it to leave that spectrum idle without use, or do you start looking for options?'"

No decisions have been made yet, however. Claure said it's just an idea he's analyzing based on the growth Sprint is experiencing. Right now, he's open to anything, including network hosting or really any potential revenue-generating scenario that comes his way.

"If it creates shareholder value, we'll look at it," he said.

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At the Citi conference, the new CEO reiterated comments he's made in the past about running the company much tighter than it traditionally was: Every leader now has to justify their position and every dollar they spend. He said Sprint won't have $5 billion in cash on hand again, but a maximum cushion of $1 billion, and it will finance its inventory to reduce the cost of borrowing. (See Sprint Starts Layoffs, Will Take $160M Charge and Sprint CEO: Price Cuts First, Best Network Next .)

"We feel comfortable we can execute our business plan with continued growth and running the balance sheet. We can get the money where we need it," he said.

Even though it's running a leaner business and exiting anything that isn't core -- like its Nascar partnership -- Sprint's not shying away from new opportunities. Claure said the carrier is looking to forge new partnerships in retail to expand its distribution, is mulling over a way to create a business for sub-prime customers with lower credit scores and is exploring content and music.

He also said he is feeling confident that Sprint's turnaround is starting to take hold, as it announced this week that it has added 30,000 postpaid net additions in the fourth quarter, reversing losses of quarters past. Claure also said Sprint's Cut Your Bill in Half promotion was so successful the company is extending the offer through 2015. (See Sprint Holds off T-Mobile US Offensive and Sprint Halves Rivals' Pricing Plans... Sorta.)

"We feel good about the future," he said.

— Sarah Reedy, Senior Editor, Light Reading

pzernik 1/11/2015 | 8:42:11 PM
Re: 2.5GHz considerations I agree with you - It's a "Spectrum Roadshow."  Sprint is trying to valuate it's own, in my opinion not so valuable, spectrum by such statements and press releases.  My old pot from 1563 has no value unless someone wants to buy it.
grantchapman 1/9/2015 | 7:26:19 AM
Re: 2.5GHz considerations Agreed, However I see this a step in the right direction. Honestly, if you take a look at the FCC spectrum dashboard, which is even somewhat incomplete for Sprint, it has in many areas more than 150MHz and upwoards of more than 215MHz in quite a few. Sprint's long argued its 2.5GHz is the cornerstone of its spectrum value, and no one is arguing against that. However, what it really needs is lower frequency spectrum to complement aside from the 800MHz to complete its idea of having the best spectrum position and network among the carriers. There will likely be more than 75% of the nations geographical landmass that will not be activated with 2.5. And now is the best time to make any kind of sale, after the high value of the AWS and before companies like dish put theirs up for sale. And in the end, really anything to grow the 2.5GHz ecosystem would be a step forward in my eyes. I doubt Claure will go too far with this though, he may simply be testing the waters to gauge shareholder reactions.
Phil_Britt 1/8/2015 | 9:46:49 PM
Re: Monetize Sprint's issue of spotty service is indeed a problem. To truly compete, Sprint needs to offer more complete coverage. So instead of simply selling 2.5 spectrum, perhaps Sprint should look to "trade" it for other spectrum and capacity to offer more complete coverage.
danielcawrey 1/8/2015 | 3:07:26 PM
Monetize I've always been a fan of Sprint's attempts to make billing simple and offer unlimited plans.

But that being said, I've always been wary of their network. Sure, Sprint's service works great when in certain areas. I still feel, however, that it can be really shoddy in some spots. 
sarahthomas1011 1/8/2015 | 2:47:36 PM
2.5GHz considerations Sprint has to be careful with what it does with its 2.5GHz. It's Spark buildout relies on it, and there's is still a very long way to go. I realize it has a great depth of holdings in this band, but it needs to carefully balance what it needs well into the future with what it sells. 
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