Sprint CFO Tarek Robbiati at an investor conference on Monday said the carrier is planning to deploy “more spectrum than any other player” in the coming quarters as part of an effort to drive down churn and improve network performance.
“You haven’t seen anything yet,” Robbiati said. “There is a lot, a lot of work going on in building the Sprint network, and our team from our chairman Masa, Gunther, and John are driving a very different network to what the U.S. market has been accustomed to so far. Our densification and optimization plan has been in flight, and we are going to put more spectrum than any other play on air over the upcoming quarters which is really, really important for customer experience both in terms of speed and in terms of capacity.”
To facilitate that deployment, Robbiati reaffirmed the idea that Sprint will increase capex spending in 2017, but will reap the benefits of what he called “capital intensity advantages.”
“As you deploy more spectrum given the deep spectrum holdings that we have, you don’t need to invest a lot in the electronics,” Robbiati explained. “We’ve already made the investments in the antennas and we already made the investments into the electronic cards that are sitting behind those, and as we want to put more capacity on air it costs a fraction of dollars for us to put more capacity on air because we have such a large spectrum holding relative to any other player. This is really – the key to the Sprint story is to understand the capital intensity advantage that we would have relative to the competition because of the depth of the spectrum holdings that we have.”
Robbiati said more than 40 percent of Sprint’s data tonnage already runs over its 2.5 GHz spectrum, but noted the carrier has only deployed around 25 percent to 30 percent of its 2.5 GHz spectrum. He said Sprint has a “long way to go before we light up all the spectrum capacity that we have,” and contrasted that position to other unnamed carriers in the country, which Robbiati said were running close to being short of spectrum.
Robiatti noted sub-3 GHz spectrum will also be a key in bridging the gap to 5G by providing capacity but also the necessary coverage that millimeter wave spectrum lacks.
During the discussion, Robbiati also addressed a number of other topics including the following:
On what the incoming presidential administration will mean for M&A: Robbiati said it’s “way, way, way too early to speculate on what the new administration would do,” but noted “we don’t manage our business with a view to do an M&A transaction. We manage our business for the long run. We’re there to build a really cracking network platform.”
On an expected inflection point in ARPU: Robbiati said an expected inflection point in service revenues is quarters, not years, away as the percentage of Sprint’s base on subsidized postpaid plans shrinks and operating revenues increase.
On spectrum leaseback: Robbiati said investors can expect a second tranche of spectrum to be handed over in an extension of its spectrum leaseback deal announced in October. The additional tranche could bring in another $3.5 billion on top of the $3.5 billion raised with the original tranche. According to Robbiati, the carrier will be working on its next tranche “fairly soon.”