Investors have been running from Sprint (S) over the past year, dashing from a network that's been hemorrhaging cash and struggling to shoulder $34 billion in high-yield debt.
And $2 billion of net losses posted over the last four quarters has only exacerbated an annual interest toll of more than $2 billion.
But now the beleaguered carrier appears to be staging somewhat of a comeback, after Japanese telecom giant Softbank (SFTBF), owner of about 83% of Sprint's outstanding shares, repurchased $4.4 billion of its own stock Monday. Softbank CEO Masayoshi Son, who also serves as Sprint's chairman. plans to take profits from the buyback to partially soften the network's debt burden.
But while Sprint shares are up 12% since Son declared the share repurchase Monday, the network is still trading down 18% on the year and more than 40% over the last 12 months.
In short, Sprint still has a long way to go, especially as rival carriers Verizon (VZ) and AT&T (T) are booking strong numbers in 2016, up 9% and 7% on the year so far, respectively.
Investors nevertheless seem encouraged by Son's vision of a durable turnaround on Sprint's horizon, and not just through buyback profits (Softbank shares are up more than 20% since the share repurchase). Son's long-term solution hinges on capturing the top spot among the Big Four wireless carries, which also includes T-Mobile (TMUS), among wireless download speeds.
"So, especially in the United States, speed is very slow for the smartphones. They always see those waiting signs, and you cannot get connection." Son said on Softbank's February earnings call with analysts. "But now, Sprint is constantly showing the number one position."
Son also emphasized that, while Sprint has been burning through cash without moving the needle on its debt problems, its free cash flow has been steadily increasing. He cited the standard valuation metric EBITDA, which stands for earnings before interest, taxes, depreciation and amortization. (But Sprint's EBITDA of $1.9 billion in the last reported quarter is up merely 6%, year over year.)
Sprint CEO Marcelo Claure also stressed the advantage that Sprint is becoming the fastest network in terms of download speeds available to U.S. customers on a January earnings call with analysts.
"Performance data from Nielsen, the world's foremost authority on independent measurement, now shows that Sprint's LTE network is delivering the fastest LTE download speed compared to Verizon, AT&T and certainly T-Mobile," he said. "This matters in a big way because Nielsen looks at how real customers are actually experiencing the network based on a panel of volunteers representing more than 270 million consumers."
Sprint has been aggressively ramping up its speed across 125 tested markets, according to Claure, which has tripled on average over the past two years, while measures of data reliability have also improved.
"Furthermore, our time on LTE is now at an all-time high of 94%," he said. "This an important indicator of the customer experience as it measures how much of the time is spent using data is on LTE versus prior generation platform like 3G."
But Sprint certainly has a long way to go as concerns surrounding its debt load mount, with its nearest maturity of $2 billion in senior notes, rated seven notches below investment grade by Standard & Poor's, coming due this December. And it appears lenders have become discouraged in Sprint at nearly the same pace as its shareholders, with its roughly $2.3 billion bonds maturing 2022 trading down at just $0.67 on the dollar in secondary markets, according to Bloomberg pricing data.
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