Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Tuesday, October 10, 2006

Sprint's Bad Hair Day, Should Cable Take An Equity Stake?

Another analyst dropped his rating on Sprint. The reasons were slowing growth and high subscriber churn rate. In other words, a lot of cancellations that need to be replaced by new customers.

Sprint may get out of this alive, but it has to show some progress while it waits for its new WiMax broadband phones to get to market But, that is two years away. And, Sprint management needs to come up with a program to keep their jobs until then.

The largest opportunity Sprint has is to fill the hole that cable companies have in competing with the big telecoms. AT&T and Verizon can offer wireless with the landline phone service, broadband and IPTV. Cable is ahead of these companies in broadband and television, but does not have cell phone operations that are up and running.

Sprint need to be in the business of not only co-marketing cell services with cable. They should be encouraging one or more cable companies to take an equity interest in the big wireless firm. According to Morninstar, Spint has $26 billion in debt. With a market cap of $54 billion, if Sprint could get cable giants to take a 20% equity stake, it could bring its debt load way down.

Sprint and cable. It may be the only way that the stock gets back on track, at least near-term.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

Powered by Blogger