Sprint lowers capex guidance again, raising concerns over network

Cell tower
Sprint once again lowered its capex guidance for fiscal year 2016.

Sprint once again lowered its guidance for capex on its network, saying that small cells and virtualization are enabling it to continue to close the gap with its rivals. And once again, some analysts are skeptical.

“When you look at our guidance for fiscal year ’16, we continue to say that we expect adjusted cash flow to be around breakeven, which reflects the fact that we are reducing our capex guidance from less than $3 billion to (a range of) $2 billion to $2.3 billion,” CFO Tarek Robbiati said during an earnings call this morning.

The move marks at least the third time Sprint has lowered its capex guidance for fiscal year 2016. In May it reduced the figure from $4.5 billion to $3 billion, then in October it lowered it from $3 billion to “less than $3 billion.”

Sponsored by Commscope

Build 5G faster and stronger with beamforming strategies

CommScope would like to share our latest white paper from Dr. Mohamed Nadder, where he goes into a deep dive and introduces the principles of beamforming, including passive and active beamforming, different configurations and their underlying technologies.

The ongoing cutback on network spending has helped Sprint slash $1.6 billion from its budget this fiscal year as it works to regain its financial footing.

Sprint continues to maintain that its sizable spectrum portfolio – particularly its 2.5 GHz airwaves – and cutting-edge technologies and strategies provide opportunities to consistently improve its network without busting its budget. The company is deploying two- and three-carrier aggregation and is pursuing Massive MIMO and High Performance User Equipment (HPUE), a handset-based technology that was certified by 3GPP several weeks ago.

There’s no question that Sprint has taken big strides since CEO Marcelo Claure took the helm. In a presentation to investors this morning (PDF), the carrier pointed to impressive recent test results from multiple third-party testing firms, and Claure said that a deployment of 200 small cells in Manhattan has more than doubled previous network speeds.

Some analysts question how sustainable that strategy is, though.

“The one thing that has definitively changed is Sprint’s capital spending on its network,” MoffettNathanson wrote in a note to investors. “We remain skeptical that this can be achieved and that capital intensity will have to rise. Consider, for example, that Sprint has about 40 percent of the subscribers as Verizon, but is currently spending at less than 20 percent as much to support their network.”

As MoffettNathanson acknowledged, Sprint did say that it plans to ramp up capex as it continues to deploy small cells. But just how much the carrier plans to spend – and whether it will be able to continue to keep pace – still isn’t clear.

“While Sprint is uniquely positioned to operate in a lower capital intensity as a result of our LTE foundation and our deep spectrum position, we do expect capex to accelerate in the fourth quarter and into 2017 as part of our densification program,” Robbiati said.

Read more on

Suggested Articles

AT&T’s 645,000 net postpaid phone additions in Q3 include 151,000 accounts that are paying under the Keep America Connected pledge.

Sweden has moved to ban Huawei telecom gear, but the Chinese government may retaliate against Ericsson who does a lot of business in China.

Verizon’s chief executive noted that the technology team is now rolling out 5G in an environment with “unconstrained supply” for mmWave.