Sprint shares plunge after T-Mobile merger talks called off
Sprint Corp`s shares fell more than 13 percent on Monday after the No. 4 U.S. wireless carrier called off merger talks with T-Mobile US Inc and a wireless partnership with cable company Altice USA failed to appease investors.
"It will not deliver the tens of billions in synergies we had foreseen in a merger with T-Mobile," Chief Financial Officer Tarek Robbiati said of the Altice agreement on a call with analysts and reporters. "Nonetheless, it does deliver real value for Sprint."
Sprint`s shares were down 12 percent at $5.84 after earlier falling as much as 13.5 percent,
Altice said it would sell mobile service on Sprint`s network under a new multi-year agreement announced on Sunday, becoming the latest cable company to enter the wireless market.
A day earlier, Sprint and T-Mobile ended merger talks, raising questions over how Sprint, in the middle of a turnaround plan to cut costs and shore up cash, could increase investment in its network.
The Altice partnership was not contingent on merger talks with T-Mobile failing, Robbiati said.
He also said comments by Sprint Chairman Masayoshi Son on raising capital expenditure to $5 billion to $6 billion annually, from $3.5 billion to $4 billion, was for the medium term and not for 2017.
Asked how Sprint would pay for the increase in spending, Robbiati said the company could fund it through cash, debt and borrowing against its spectrum, or wireless airwaves.
Last year, Sprint said it would raise an initial $3.5 billion by mortgaging about 14 percent of its spectrum.
Jonathan Chaplin, an analyst at New Street Research, said $5 billion to $6 billion annually was the minimum level at which Sprint could build a credible network, but the company faced challenges in catching up with wireless carriers that are moving ahead with developing next generation networks, or 5G.
"Sprint is trying to catch up to a moving target," he said. "I think the market is going to be reasonably skeptical."
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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