Sprint to deploy 'a few thousand towers' over next 2 years as part of capex hike

Sprint plans to roughly triple its capex for the next two years.

Sprint will deploy “a few thousand towers” as it significantly ups spending on its network over the next two years, CFO Tarek Robbiati said Tuesday. But that won’t prevent the carrier from balancing its free cash flow over the next two fiscal years.

Sprint will pour $5 billion to $6 billion into its network in fiscal year 2018, SoftBank CEO Masayoshi Son said last month, effectively tripling its recent capex. Robbiati said Tuesday at an investor conference that capex amount will likely be maintained for the following year, but the carrier’s financial footing is solid enough that adjusted free cash flow should be “around breakeven” despite the spending hike.

Sprint’s fiscal 2018 will start in April.

“So, if you look at our operating cash flow, we generated $3.2 billion in the first half (of fiscal year 2017),” Robbiati said, according to a Seeking Alpha transcript. “The whole of last year we generated $4.2 billion. This year, from a capex standpoint, we are targeting $3.5 billion to $4 billion of capex, which is $2 billion more than the prior year, right? So we have the headroom to invest more. Next year it’s going to be a similar story … We are equipping ourselves from a financing standpoint to be able to manage the impact that capex investment will have around cash.”

Sprint has been criticized for trying to cut costs by focusing on small cells to densify its network, minimizing its spending on traditional towers. But that strategy hasn’t always been as effective as the carrier hoped, CEO Marcelo Claure said last month, and Sprint will make macrocells a higher priority as capex ramps up.

Robbiati confirmed that strategy, saying the operator is pursuing a “neighborhood expansion” that will focus primarily on shoring up capacity within its existing footprint rather than expanding coverage. The CFO outlined plans add “a few thousand” more towers and add tri-band support to all its towers and deploy Massive MIMO.

But Robbiati also noted that Sprint doesn’t plan to sustain that capex level beyond the next two fiscal years.

“This isn’t, I would say, the average normalized level of capex spend,” he noted, adding that capex would return to a range of $4 billion to $5 billion. “It’s above it. So this will be coming down over the upcoming years.”