Sprint's Euteneuer: We're looking at 600 MHz auction, but don't need to participate

Sprint (NYSE: S) is interested in participating in next year's planned incentive auction of 600 MHz broadcast TV spectrum but does not feel absolutely compelled to take part, according to CFO Joe Euteneuer. That's because of the improvements Sprint is seeing by deploying its 800 MHz and 2.5 GHz spectrum for LTE and the addition of Wi-Fi calling.

"The 600 MHz auction is something we're looking at but not necessarily something we need to do," Euteneuer said during an appearance at the J.P. Morgan Global Technology, Media and Telecom Conference. The incentive auction is currently scheduled to begin in the first quarter of 2016.

Two years ago, Euteneuer said, it would have been more of an imperative for Sprint to participate in the auction, which many in the industry think will be the last time low-band spectrum will be auctioned for the foreseeable future.

Euteneuer's comments are notable because Sprint has been a vocal proponent of rule changes it wants the FCC make ahead of the auction. Sprint, along with T-Mobile US (NYSE:TMUS), Dish Network (NASDAQ: DISH), C Spire Wireless and a group of policy and public interest groups, recently forged a new alliance intended to pressure the agency to craft 600 MHz auction rules that they say will benefit smaller carriers and increase wireless competition. The coalition wants the FCC to reserve spectrum in the auction exclusively for smaller carriers--up to 40 MHz, or at least half of the spectrum available in the auction.

However, Euteneuer noted that by the end of the year Sprint expects its 800 MHz LTE network to be largely built out (except in some areas where its rebanding process is not yet complete). "We feel very, very good about our deployment there," Euteneuer said, pointing to the band's ability to penetrate buildings.

Sprint is also continuing to deploy its 2.5 GHs spectrum for TD-LTE service to enhance capacity. Sprint is not disclosing how many POPs it currently covers with 2.5 GHz LTE or how many it plans to cover by year-end. However, Sprint CTO Stephen Bye told FierceWireless earlier this month that the spectrum will be deployed where and when it is needed to augment capacity.

Further, Sprint is going to rely a lot more on Wi-Fi to augment its network capacity than it did in the past. Euteneuer noted that many homes and offices, where people spend most of their time, have Wi-Fi in them now. Sprint now has more than 25 smartphone models--including the newest iPhones--and more than 15 million customers that can make calls over Wi-Fi. Sprint has around 57 million total customers.

Euteneuer said that Sprint is seeing its lowest ever levels of customers returning devices within 14 days of purchasing them. He noted that when Sprint was in the midst of its Network Vision deployment, where it had to rip out and replace its CDMA voice equipment, the carrier would see customers come in frequently, saying they could not make phone calls. Now, he said, the customers are seeing a significantly improved experience on the carrier's tri-band LTE phones, especially those that can take advantage of 2x20 MHz carrier aggregation in the 2.5 GHz band.

"It's a different experience," Euteneuer said. "We're finally at that point where this network, with its continued optimization, is continuing to get better and better every day. And people are experiencing it and we're seeing it in our numbers."

In the first quarter Sprint's postpaid churn fell sharply to 1.84 percent, down from 2.11 percent in the year-ago period and 2.3 percent in the fourth quarter. Euteneuer attributed that drop partly to improvements Sprint is seeing in its network and partly to the improved credit quality of the customers it has been attracting (he said Sprint saw a 65 percent year-over-year increase in the first quarter in the number of customers it brought in with prime credit quality).

Euteneuer said that Sprint is "going to continue to spend capital to enhance the network and take it to the next level." In the past, Euteneuer said, Sprint would spend capital on the network and then starve the network. That's not going to happen anymore, he said. "Right now we have some momentum behind us and we want to continue that," he said.

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