Shares of Sprint Nextel Corp. were trading more than 9 percent higher on Monday after the wireless carrier signed a new credit arrangement and received a buy rating from Goldman Sachs.
Kansas City-based Sprint nailed down a new, $2.1 billion credit facility late last week. The company will use the money for general corporate purposes and to support a $1.6 billion letter of credit required by the FCC as the agency reconfigures the 800MHz band. That swath is considered crucial to high-speed networks of the future and Sprint uses the 800MHz band now for its CDMA service.
The unsecured revolving agreement expires in October 2013 and replaces the $4.5 billion revolving credit facility that was set to expire this coming December.
Meantime, Goldman Sachs upped its view of Sprint because the worst of the providers revenue declines appear to be behind it. Sprint is boosting its prepaid subscriber numbers, even as it continues to lose some of the more valuable post-paid users, and ended the first quarter with cash, cash equivalents and short-term investments worth $4.37 billion. The investment bank look favorably on those numbers and added it thinks Sprint is retaining its customers better than before.
Indeed, Sprint, the nations third-largest mobile carrier, lost 578,000 postpaid customers in the first quarter, down from 1.25 million a year earlier. Analysts had expected the company to bleed between 600,000 and 775,000 contract subscribers. Sprint offset those losses, though, with the addition of 348,000 prepaid users, as well as 155,000 wholesale customers. The companys growing line of smartphones contributed to the gains.
On Monday, investors listened to Goldman Sachs advice. By 12:08 p.m. ET, Sprint stock had reached $4.81 per share, a 9.07 percent increase.
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February 15 2019 @ 14:45:26 UTC