Sprint didn't take long to move on after its failed courtship with T-Mobile. But investors weren't thrilled about the inability of the two wireless network operators to come to terms.
The carrier announced a deal to serve as the network operator for an upcoming MVNO offering from Altice, the nation’s fourth-largest cable provider. The pact—which Sprint positioned as a “first of its kind agreement”—enables Altice to provide wireless services through Sprint’s wireless network, while Sprint will use Altice’s broadband infrastructure to densify its wireless network.
“We are incredibly excited to work with Altice USA on this innovative win-win solution that benefits both of our companies,” Sprint CEO Marcelo Claure said in a press release. “As content and connectivity continue to converge, we believe this approach will be a model for future strategic arrangements across multiple industries including cable, tech and others.”
Shares of Sprint were down more than 12% Monday morning following the news.
The announcement came just one day after Sprint and T-Mobile said they had called off merger talks, ending months of speculation that the nation’s two smallest major wireless network operators would join forces. Meanwhile, Sprint parent SoftBank issued a statement announcing plans to increase its stake in the U.S. wireless carrier.
“We are entering an era where billions of new connected devices and sensors will come online throughout the United States,” SoftBank CEO Masayoshi Son said in a prepared statement. “Continuing to own a world class mobile network is central to our vision of ubiquitous connectivity. Sprint is a critical part of our plan to ensure that we can deliver our vision to American consumers and we are very confident in its future.”
The Altice pact is the latest tie-up between cable companies and wireless network operators as the fixed-line and mobile industries collide. Both Comcast and Charter have MVNO agreements in place with Verizon, and Comcast has already launched its Xfinity Mobile offering.
Sprint CFO Tarek Robbiati made a point of highlighting the difference between those deals and its alliance with Altice, however.
"A standard MVNO with a cable company in our view would not make sense if there isn't any reciprocal opening up of the infrastructure for Sprint, and so this is why we went down that path," Robbiati said on a conference call to discuss the deal. "This is not a standard MVNO deal. There is an awful lot of value exchanged between the two parties."
Robbiati also said the agreement had nothing to do with the failed negotiations to merge with Sprint, and added that the two companies will pay each other for access to the other's network.
"Simply put, Altice will pay us those rates per gigabyte and per minutes of use that are underpinning the contract with them," he said. "So there is real revenue and cash that will be accruing to the Sprint P and L (profit and loss) moving forward."
Sprint’s 2.5 GHz airwaves are highly prized for their ability to transmit large amounts of data quickly, but because they don’t propagate as well as lower bands, they require a highly densified network. Partnering with Altice should enable Sprint to leverage that spectrum more quickly while minimizing spending on its network.