Sprint announced it will raise roughly $2.2 billion by selling some of its equipment at its cell towers to a new entity, Network LeaseCo, which the company described as "several bankruptcy remote entities." Under the complex transaction, Network LeaseCo will lease the equipment back to Sprint, and the equipment will be used as collateral for Sprint to borrow $2.2 billion from "external investors," including SoftBank, Sprint said.
Sprint said it will pay back the $2.2 billion "in staggered, unequal payments through January 2018."
"Sprint and SoftBank have worked together again to create a unique structure that provides Sprint with an attractive source of capital," said Sprint CFO Tarek Robbiati in a release. "This transaction is an important first step in addressing upcoming debt maturities and allows us to stay focused on our corporate transformation, which involves growing topline revenues and aggressively taking costs out of the business to improve operating cash flows."
Sprint said it had total liquidity at the end of last year of $6 billion, with an additional $600 million available under vendor financing agreements that the carrier can use to purchase of 2.5 GHz network equipment.
Sprint has been working on the network-leasing deal for months; the carrier in November announced a similar financial arrangement for its handsets. The handset agreement was designed to put the financing of leased devices off of Sprint's balance sheet and provide it with more liquidity. The carrier raised $1.1 billion through the handset-leasing agreement with Mobile Leasing Solutions.
Sprint's latest financial action with Network LeaseCo coincides with a major cost-cutting initiative and is geared toward improving Sprint's financial footing as it works to regain momentum in a mobile market that is largely dominated by its rivals.
However, Sprint has enjoyed some progress: The company posted a solid fourth quarter, reporting 501,000 postpaid net additions, up from just 30,000 year-over-year, and an adjusted EBITDA of $1.9 billion, far outpacing Wall Street estimates.
- see this Sprint release
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