No Decision Yet at Sprint on Bidding in TV Incentive Auction, CEO Says
Almost half way through 2015, with the TV incentive auction to start next year, Sprint still hasn't made any decisions about whether it will participate in the auction, CEO Marcelo Claure said on a call with analysts Tuesday. Sprint also said Tuesday it has reduced sharply post-paid churn -- the measure of customers leaving for another provider. Sprint sat out the FCC's last big auction of mid-band AWS-3 spectrum.
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The incentive auction is a “once-in-life opportunity to acquire low banded spectrum and a critical input for cost-effective deployment of wide area coverage,” Claure said on the call. The FCC's rules for the auction are important, he said. “It's important to understand what are the auction rules going to be to make sure that smaller carriers like us have a fair opportunity,” he said. “We're looking at it every day, want to make sure that the rules are right, and we want to make sure that we're keeping the future band as clear of remaining TV stations as possible.”
Sprint could find the money to buy 600 MHz spectrum if it decides to jump into the auction, Claure said. Options include issuing debt, issuing stock or selling some of Sprint’s 2.5 GHz spectrum, he said. “I feel that we have very clear alternatives if we decide to pursue the 600 MHz spectrum.”
Sprint’s partnership with bankrupt RadioShack is a key part of its growth strategy, but gross adds from sales there have been “immaterial” since “we've been doing this I think for less than a month,” Claure said. The original plan was to open Sprint RadioShack stores at the beginning of June, but the company is ahead of schedule, he said. To date, “we have over 500 stores that are fully deployed and we have the other 1,000 being operated today by RadioShack employees,” he said. The deal with RadioShack will increase Sprint-owned stores from 1,000 to more than 2,400, he said.
Sprint said it added 349,000 branded tablet subscribers, but lost 201,000 Sprint-branded phone subscribers. Net subscriber additions came in at 211,000 a reversal of the 231,000 net loss last year. “While we're not happy with losing postpaid phones, we're very pleased with the progress, and our goal remains to have positive postpaid net additions, which we expect to achieve this year,” Claure said on the call. Sprint has momentum, he said.
Claure also said his “biggest disappointment” in Q3 was a churn rate of 2.3 percent. That rate was reduced to 1.84 percent in Q4. Consolidated net operating revenue for Q4 was $8.3 billion, down $593 million or 6.7 percent year over year, Sprint said. Wireless operating revenue fell $482 million or 5.8 percent compared with last year. EBITDA came in at $1.7 billion, a 5 percent decline over the same period last year. Revenue fell 7 percent compared with the year-ago quarter to $8.28 billion.