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Sprint Setting Up New Entity to Fund Network

As it tries to further cut costs, Sprint is looking at another way to help finance its network buildout.

"We are establishing a network-related financing entity in co-operation with SoftBank and its partners," said Sprint Corp. (NYSE: S)'s CFO Tarek Robbiati on the operator's fiscal third quarter call. He says that the entity will raise between $3 billion and $5 billion in fiscal 2016, which, for Sprint, starts on April 1, 2016.

Sprint executives say that they will use a small amount of the operator's spectrum as collateral towards the new entity and that Sprint will still own the spectrum. They did not specify many more details, however, on the call.

The entity will follow in the footsteps of the handset leasing company that Sprint and SoftBank recently created. It is intended to provide funds towards Sprint's capex spending in the future. (See Sprint to Get $1.2B From New Leasing Venture.)

Sprint spent $1.6 billion on capex in its third quarter. CEO Marcello Claure says that the company is working on adding density to its network using small cells. He says that Sprint is using "crowdsourced data" to address "customer pain points."

"We are also excited by the yearly progress on densification plans to further differentiate our network in the future, which is primarily to be focused on activities for our small cell deployments today," says Claure.

Sprint executives have repeatedly said that they are using alternative vendors to supply its small cells, without yet naming them. (See Sprint's Small Cell Suppliers Could Include Some Surprises for more information on which vendors might be used.)

The operator is intent on adding small cells on its large holdings of 2.5GHz spectrum, which offers fast data speeds but less range than its 800MHz or 1900MHz LTE networks. (See Sprint CFO: 600MHz Auction Will Not Deliver Enough Spectrum.)

CTO John Saw added that the operator is looking at adding more microwave radio backhaul -- along with dark fiber -- to decrease its dependence on leased fiber connections to the Internet. Sprint has been a pioneer in using radio backhaul in the US. (See Sprint to Place Big Backhaul Bet.)

For more on LTE, visit the 4G LTE content section here on Light Reading.

Sprint has been attempting to cut costs while enticing new customers with a half-off offer in the last few months of 2015. The operator added 501,000 new subscribers in the quarter. (See Sprint CFO: 600MHz Auction Will Not Deliver Enough Spectrum.)

Sprint's revenue for the winter quarter totaled $8.11 billion, compared with revenue of $8.97 billion in the third quarter of fiscal 2014. The company posted net loss per share of $0.21, compared with a net loss of $0.60 in the same quarter a year ago, on an operating loss of $197 million.

— Dan Jones, Mobile Editor, Light Reading

DanJones 1/28/2016 | 12:46:16 PM
BTW, even if they raise $5B That's less than a year of capex at current spending rates...
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