Sprint is facing some major economic challenges as it continues to burn through billions of dollars in operation. Even the financial support from SoftBank might not prove to be enough to turn the tide of economy and profit in favour of the telecom company. SoftBank, a Japanese multinational company, had acquired a majority in Sprint for $21.6 billion in 2013. According to SoftBank, more cash would be available to Sprint if Dish Network had not challenged SoftBank to the bid which ultimately increased the price. Dish Network surprising also challenged the bid for acquisition of ClearWire, increasing the cost borne by Sprint in order to acquire the company. By June, Sprint had $2.3 billion in cash, and some additional $5.7 billion from various sources including vendor financing, and a whopping debt of $34 billion. The company's alarming rate forced Moody's Investor Services to drop the credit rating of the company citing skepticism in the company's ability to stabilize their operations and post a profit. Moody projects an annual expenditure of over $9 billion in the year 2015 and 2016. Maturities are also scheduled to grow at an alarming rate of $2.5 billion every year for six years.
The company has an impressive portfolio, including the strongest in higher frequency 2.5 GHz and lower 1.9 GHz bands. But Sprint contains a smaller amount of spectrum in the lower 800 MHz bands, hampering performance as the lower frequency can travel longer distances, requiring less towers in between. Sprint's brand is running on low customers with a high defection rate, and their networks are not top notch either. Sprint has also surprisingly decided to sit out of the early 2016 auction of lower 600 MHz spectrums as they think their current portfolio is enough. Sprint is trying to improve their network quality by all means possible, and are hoping for a first or second best performance among all networks by 2017.
Sprint has posted more than $32 billion sales in 2014, suggesting an improvement, and the company's earnings before interest, taxes, depreciation, and amortization have increased by about 16 percent to $2 billion. SoftBank has also boosted the stake from 79% to 83% in recent months, though it is more of a signal to investors that they are not giving up on the company, rather than an infusion of cash. Sprint has announced plans to launch a couple of off-balance sheet partnerships with SoftBank, its owner, to reduce the financial stress on the company and relieve it of the burden of customer handsets and network equipment without running into additional debt or having to auction the company. Merger talks with T-Mobile also seem farfetched and depend on the political scenario of the country, as share prices of Sprint have dropped below $5. Sprint's success ultimately depends on the special financing entities set up by the company.