Sprint’s marketing message: why pay a lot more for a network that is only marginally better?

“And so we’re very pleased with that campaign, because what it actually pointed out is that there isn’t much of a difference between network performance today. We don’t profess to have yet the best network but we do feel that our network is good and certainly does not justify a very large premium that the competitive providers are actually charging… we shifted the messaging to say why pay more. And this started to resonate with consumers in the United States” Tarek Robbiati – CFO

Network is the number one cause of churn

“50% of the reasons why customer churn are network related. 30% to 35% are price related and 15% to 20% are service related.” Tarek Robbiati – CFO

CapEx is lower presently because Sprint is benefiting from its historically high CapEx

“We spent and historically Sprint has had the highest CapEx to sales ratio of the industry. With Network Vision we spent a fair bit of money modernizing our tower infrastructure. And so we are still benefiting from that historic investment and this is really a positive walking into fiscal year ‘16 and that’s why our CapEx in part was lower in the first quarter of fiscal year ‘16.” Tarek Robbiati – CFO

CapEx is also lower because small cell installation is far cheaper than towers and other previous infrastructure

“The cost of those cell sites, small cell site is a fraction of the cost of the towers. So it depends on how many cell sites you need to build in every geography but a cell site is on average costing 20% the cost of a tower. So you need to spend less per small cite as you roll out some of them. So the spend is more scattered over time because of the permitting and the unit dollars that you spend are lower and the two effects combined explain why we guided the market towards the 3 billion mark for this fiscal year. We said less than 3 billion.” Tarek Robbiati – CFO

Sprint wants to utilize multiple sources of financing going forth

“It’s important for us that we have a diversified financing strategy. And so we will use different types of source of financing whether it’s high yield, whether it’s asset backed lending or others that I’m not mentioning but — to continue to finance our operations. And that’s really important because now that we have shored up liquidity we’re paying more attention at lowering our cost of capital and lowering our cost of debt. We pay every year around $2.3 billion of interest expense. It’s a very high number and it stands in the way from us becoming pretax positive. You know, it’s not talked a lot about in our – by the analysts who follow us but we do have a fair bit of operating losses on our balance sheet that we would like to monetize and realize the value for. We have $19.2 billion of notes at the end of the first quarter… It’s really important that we have sufficient liquidity to repay them and it’s a gradual process that we are embarking on incremental over the next several quarters to reduce our cost of debt.” Tarek Robbiati – CFO