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Sprint Faces Huge Debt, But No Immediate Repayment Obligation

In spite of its huge debt load, Sprint Nextel Corp. has bought itself several months before it has to pay any huge sums back.

Its next major debt, $300 million, isn’t due until May of 2013.

Sprint faced an obligation to pay twice that amount next year, but it recently paid down nearly $1.5 billion in debt early, including $473 million in notes that were scheduled to mature in 2013.

In a note earlier this month, Moody’s Investors Service said it believes Sprint has sufficient cash on hand to fund its operations for the next 12 months.

As of June 30, 2012, Sprint had on hand $6.8 billion in cash, cash equivalents and short-term investments plus $1.2 billion of undrawn borrowing capacity available under its revolving bank credit facility. That’s up from $5.2 billion in available funds in the year-ago period.

At the end of the second quarter, Sprint was saddled with about $21.3 billion in debt. Fortunately for Sprint, most of the debt doesn’t mature for years.

In March 2014, Sprint will have to pay off $1.2 billion in notes, followed by another $181 million due two months later. Another payment of $1.6 billion is due in 2015. But by then, Sprint hopes to be in a much stronger position competitively and financially.

Following its second-quarter results, some analysts said the nation’s third-largest wireless carrier is making progress turning around its business.

“Margins have held up surprisingly well, cash generation is stronger than expected and the customer experience continues to improve,” Moody’s senior vice president Dennis Saputo said in a statement, Aug. 9. “However, the road ahead is far from clear and we believe that ongoing progress remains fragile.”


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