Sprint Corp (NYSE:S) Can Drop To $4 Without T-Mobile US Inc (NASDAQ:TMUS) Deal

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Telecom giant Sprint Corp (NYSE:S) announced its fourth quarter results last week. The company reported a per share loss of $0.07 on $8.5 billion in revenue, versus the consensus estimate of a loss of $0.1 per share and $8.69 billion revenue. Adjusted EBITDA came in at $2.68 billion, versus the consensus of $2.66 billion.
Sprint Corp (NYSE:S) added 930,000 new subscriptions in fiscal 2016. However, the company lost 118,000 post-paid subscribers in the fourth quarter, and added 180,000 new pre-paid subscriptions. However, Sprint’s competitors Verizon reported a loss of 289,000 postpaid phone subscribers in the March quarter, while AT&T lost a whopping 348,000 postpaid phone customers in the same period.
Sprint Corp (NYSE:S) also announced a new device called “Magic Box” that will increase customers’ data upload and download speed by 200%, and will also improve network quality for Sprint customers.
Wells Fargo analyst Jennifer Fritzsche said in a report that Sprint’s lack of improved free cash flow was the main downer for the stock. But investors also lost interest in Sprint Corp (NYSE:S) stock after the company’s CEO Marcleo Claure shot down the speculations which suggested that Sprint was considering to sell or spin-off some of its spectrum. But Claure said Sprint Corp (NYSE:S) plans to use “every piece of” spectrum it has for competitive advantage. Mr. Claure insisted that “at this point in time,” Sprint has no intention to sell its spectrum. Claure also didn’t show any enthusiasm about the merger of Sprint with T-Mobile. The chief executive said that the company could be “very patient” about the cdeal in question. Several analysts had projected that Sprint Corp (NYSE:S) and T-Mobile (NASDAQ:TMUS) will hasten to initiate talks regarding a merger after expiration of the year-long ban on deal-making imposed by federal spectrum auction rules. The ban expired on April 27.
MoffettNathanson LLC’s analyst Craig Moffett thinks that Sprint Corp (NYSE:S) stock will crash even more if the company chooses not to merge with T-Mobile. Moffett thinks that Sprint Corp (NYSE:S) will have a tough time in the future without a partner. The analyst has a ‘Sell’ rating on the stock with $4 price target.

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