Sprint reportedly considering many options to leverage its 2.5 GHz spectrum

SoftBank believes Sprint’s spectrum is undervalued and is considering several options to leverage those airwaves

Sprint parent SoftBank is reportedly considering tie-ups between its U.S. carrier and a variety of partners in an effort to leverage its vast portfolio of spectrum. And it may even spin off some of its airwaves into a separate, publicly traded company.

The Japanese behemoth spent more than $20 billion to acquire Sprint in 2012, and the company had hoped to acquire T-Mobile as well, merging the carriers to take on Verizon and AT&T. That effort was dropped when U.S. regulators indicated they were opposed to a merger, however.

Reports surfaced in February that SoftBank was willing to give T-Mobile control of Sprint if necessary to achieve a merger between the two smaller U.S. operators. And investors appear to be betting on a tie-up between the two carriers, sending shares of both companies skyward in recent months.

But Bloomberg reported Sunday that SoftBank believes Sprint’s spectrum is undervalued and is considering other options to leverage those airwaves. Sprint has long touted its mid- and high-band spectrum, saying those assets enable the carrier to meet ever-increasing demand for wireless data while minimizing the need to invest in its network.

As Bloomberg noted, though, Sprint remains the smallest major wireless carrier in the U.S., and it still faces significant financial challenges. It owes billions of dollars in debt that must be repaid over the next few years, and the carrier’s financial burdens have weighed heavily on the parent company over the last few years.

Merger talks in the wireless industry have largely been forestalled by the so-called “quiet period” required by the FCC’s incentive auction of 600 MHz spectrum, but that moratorium will be lifted later this week. Sprint believes cable companies such as Comcast, Charter or Altice could be interested in its spectrum as they try to elbow their way into the wireless market, Bloomberg said.

While Sprint’s trove of 2.5 GHz spectrum is tremendously valuable, some analysts have questioned whether the carrier can fully leverage the airwaves given its precarious financial position.

“Sprint is extremely well-positioned with respect to theoretical capacity, given their rich 2.5 GHz holdings, and the increases they have enjoyed and will enjoy in spectral efficiency gains from refarming to LTE, and also spectrum re-use and further efficiency gains through MIMO—something particularly conducive to the smaller wavelengths of 2.5 GHz, as well as HPUE,” Craig Moffett of MoffettNathanson wrote last month in a research note. “That said, we remain concerned about the usability of Sprint’s 2.5 GHz network, notwithstanding improvements in spectrum efficiency in this band. More significantly, we have ongoing concerns regarding the company’s liquidity and therefore their ability to meaningfully invest in their network and appropriately realize the theoretical potential of their 2.5 GHz spectrum trove, as it would be very expensive to do so.”