Extreme Stock: Five Reasons to buy Sprint Stock

Update Aug 5th: on Aug 4 Earning call: [Mr. Son work from 10pm to 2am every days to help Sprint, you would want to put money into this hardworking leadership]
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Masayoshi Son, Sprint Corporation – Chairman [49]

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Well, the size of the leasing facilities is going to be significant size, and it will be enough size to offset the need of handset lease sales, the requirements. And for the net next-generation network, CapEx, again, would be — with this preparation of leasing facility, should be enough to cover the need of the net next-generation network CapEx. Regarding the next spectrum auction, it’s too early to make a comment. Things are still unclear on the government side. So it’s too early to make a comment.

But because of the cost down in OpEx, and also because of these two leasing facilities that we are preparing, the interest bearing debt should start to decrease. So from our experience that we have done, Vodafone Japan acquisition, initially our net debt over the EBITDA ratio was 6 times. So our leverage was very high. Sprint is right now 5 times.

So SoftBank started even higher-leveraged ratio position, and then very quickly, we reduced the total size of the debt. Of course, we also did network, the handset accounts receivable securitization and so on, similar to this lease facility effort. So we begin 1.0 instead of 6.0, in terms of the leverage ratio over the EBITDA.

I am very confident that Sprint interest-bearing debt multiple would be decreasing very quickly, very significantly. So this is the same path that we have come in the past. So I’m confident with Marcelo’s leadership and our joint effort, we would be able to improve dramatically from here on.

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Update: July 14, 11am, 2015:
with Boost Mobile Launches First Wi-Fi and push LTE density, Sprint enters home-board band market

Update: July 10, 11am, 2015:
There is rumor that Softbank will buy > 20Mhz, 600Mhz spectrum and lease to Sprint. if that is true, then Sprint can compete with any vendor. Good to buy Sprint at $3.8. Dirty cheap even if T-Mobile+Dish risk Ok. Hong Kong billionaire Li Ka-shing bought UK O2 for $13.83 billion, and wireless frequency has quadruple in price in last spectrum auction which tell how cheap Sprint is.

 

1. Quality of all 4 biggest US networks improved significantly from begin of 2014 to end of 2014. Sprint’s quick deploy of 800Ghz in both 3G and 4G network has helped improving its reliability and indoor/remote coverage in a big way. Sprint’s network’s overall score 86.6 in end of 2014 is better than that of Verizon 81.6 at begin of 2014 — the quality difference between networks are shrinking faster than most think.

 

Begin of 2014: all 4 biggest US networks scores:

rootmetrics 2014

End of 2014: all 4 biggest US networks scores:

rootmetrics scores 2014

 

2. Since Softbank CTO Miyakawa came to Sprint Nov 2014, he has brought(borrowed) about 100 Softbank experienced network engineers with him to USA. Sprint’s Tri-band SPARK LTE network has expanded into 2~3 times area/cities, now in 62 cities: including Seattle, Boston, San Francisco. SPARK LTE has network speed up to 50MB/sec, which will boost the Sprint speed &data test score from the worst to the best in next RootMetrics speed test, speed+data score should together increase about 30 points and overall score should be 93~95, or overall similar to what Verizon’s current score. More importantly, Sprint’s call quality of 90.6 is similar to ATT and VZ. With improved and expanded LTE and SPARK network, Sprint will gain both more customers and win those customers as new-trusted investor.

 

End of 2014: all 4 biggest US networks scores in reliability, speed, data, call:

rootmetrics scores 2014-2

rootmetrics scores 2014-3

 

3.  Feb 24, 2015 through March 2, Claure and Chief Financial Officer Joseph J. Euteneuer bought 5,100,000 Sprint (ticker: S) shares for $25,108,980, an average of $4.92 each. That tell CFO and CEO have big confidence in Sprint.

 

 

4. FCC raised a record $44.9 billion in the auction of so-called AWS-3 airwaves, 4.4 times more than FCC and analyst expected. Sprint hold the largest total Mhz of spectrum in USA and its vast spectrum(204Mhz) value should have increased x times. In addition, Sprint’s network is CDMA(Sprint and VZ) much less harmful irradiation than GSM(T and T-mobile). UC Berkeley professor Dr. Moskowitz  puts GSM’s harmful irradiation 28 times higher than CDMA. When your cell phone send out signal to remote base-station miles away, its out-going signal is as strong as mini-base-station and very harmful. So if Sprint play “health” card, ATT and T-mobile will lost user rapidly. With those huge spectrum and big bandwidth, Sprint will be able to get into new business in home broadband and security monitoring.

 

 

5. Sprint is a long term value: car, laptop, gas/electric meters, home-monitoring, traffic-light, automatic cooking wares and many items will be connected to wireless in next 5 years. because the price of wireless chip and data are getting big scale and cheap.

Mr. Son is a great investor who is the first to invest in Alibaba($20M for 34% stake, now worth $60 Billion); His Softbank bought Sprint at $7. Sprint is now 80% owned by Softbank.

Surge in smartphones/data while limited spectrum have forced telecom service providers to deploy more dense antenna (the smaller diameter each antenna cover, the higher total throughput 20Mhz can carry for each person: because same 20 Mhz support smaller area, thus smaller number of people thus more MBit per people, in big city, each antenna diameter shrinks constantly to about 1~2km in dense populated Chinese cities (used to be ~20km); small cell is a few hundred meters (cost/size similar to WiFi, “free” sometime by big vendors to China Mobile in order to sell big base stations). In fact, too good of propagation of low Mhz can cause serious interference b/t small cells). And the bean-forming specific to TDD also extend diameter 50% to be same as FDD 1.9Ghz. So there is less difference between low frequency vs high frequency than before. Typically low Mhz macro-base-station and 2.5Ghz small-cell-base-station overlap(2.5Ghz coverage doesn’t have to be continuously), 2.5Ghz is configured with high priority to be used by users devices. Low Mhz frequency is only used if 2.5Ghz small cell isn’t available due to distant or obstruction. In this way, even if small cell is deployed sporadically or only on existing towers, total throughput is increased for each macro-base-station covered area because it is no-longer used for those people who have access to 2.5Ghz. This is how Softbank proved 2.5Ghz(propagation distance about ~2km) to be successful in Japan. in this way, small prime frequency, assisted by huge 2.5Ghz, can serve vast MB/sec, and this mixture get even higher throughput than prime spectrum only of same Mhz size). (I worked on LTE base-station before. detail report $500 individual, $1000 institute, contact editor@topcools.com). Basically, with huge 2.5Ghz and total spectrum more than ATT and VZ, Sprint will be as big as ATT and VZ. Sprint’s huge 2.5Ghz are not well utilized as TD-LTE just starting setup in 24 market and Iphone just start support TD-LTE, but Sprint will roll into 100MPP at the end of 2014 with super fast TD-LTE. Sprint is of immense value and Mr. Son is smart and insider of 2.5Ghz use and new CEO has high EQ.

The total spectrum Sprint has are more than T and VZN. Sprint can’t utilize its big 2.5Ghz TD-LTE spectrum until now because Iphone 6/6S just started support TD-LTE.

Sprint is late to construct LTE due to TD-LTE mature later than FD-LTE. Also its “Network vision” has disrupted service and has unhappy customers in many location and lost a lot of LTE customers, its LTE just start at 24 market currently, but it is rolling out to 100MPP by year end. Sprint’s balance sheet show debt, but it invested dozens of billions on spectrum and wireless infrastructures. His thinking is here and New CEO’s detail plans are here. Sprint currently has 5Mhz(800Mhz)+5Mhz(1900)+20Mhz(2.5Ghz) carrier aggregation tri-band “Spark” LTE). When Sprint’s 800 MHz ESMR (both CDMA and LTE) finish, its coverage quality will be enhanced significantly for both voice and data, as it can smooth the empty spots of 1900Mhz and 2500Mhz. to really challenge ATT and VZ, Sprint needs to bid another 20~30Mhz of prime spectrum(<1000Mhz) for smoothing coverage in low POP density area and keep cost competitive. With Softbank’s Alibaba stake worth nearly $60billion, Sprint is ready to battle out 2x20Mhz or 2x40Mhz at 600Mhz in the FCC auction in mid-2015(about $10 Billion). Once Sprint has that spectrum, Sprint can construct a network that is better than VZ and ATT.

S4GRU answer to comment:
“this will increase performance on these sites to 50-70Mbps speeds for Triband device owners, as each foes online. And it will increase speeds on those same sites up to ~150Mbps when Carrier Aggregation starts to occur later this year and when CA capable devices start to be sold”.

Telecom is defensive stock, also it is pure US based and not affected by the next big risk (not in USA). Fund managers are still think 2.5Ghz no good and irradiation is not big deal. But Mr. Son at Softbank know it. I think fund managers will catch up. It is good time to get in at the start of ramping up TD-LTE both on base stations and smartphones and fully use majority if Sprint’s spectrum. I expect Sprint wireless throughput to increase 2~10 times at its TD-LTE + FD-LTE 100Mpp market.

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Frequency band Band number Generation Radio Interface Status Notes
800 MHz ESMR CDMA Band Class 10 3G CDMA 1x Advanced Active/Building out For voice and low-speed data (<150kbit/s) [43]
800 MHz ESMR LTE Band 26 4G LTE Active/Building out
1900 MHz PCS CDMA Band Class 1 3G CDMA 1xRTT (1xAdvanced in some markets) Active
1900 MHz PCS CDMA Band Class 1 3G CDMA EVDO Rev. A Active
1900 MHz PCS LTE Band 25 4G LTE Active/Building out “Primary” LTE band[44]
2.5 GHz BRS/EBS N/A 4G WiMAX Active/Decommissioning by the end of 2015 No longer selling WiMAX devices. 2015-2016 – Tentative date[6]
2.5 GHz BRS/EBS LTE Band 41 4G TDD-LTE Marketed as “Spark” Active/Building out Phase 1 and Phase 2 Deployment Underway [45]

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BIO of new CEO here.

 

Copyright: Topcools.com, 2014. republishing OK but must bear this line.

 

 

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