Wireless carrier Sprint continues to struggle with debt that's getting increasingly hard to control, some industry analysts believe. The company posted $30 billion in long-term debt last year while only boasting $19 billion of equity, and current industry trends suggest Sprint will only add more debt in the coming years as new accounting rules now require it to report expenses from operating leases. The new regulatory framework will likely see Sprint add $17 billion of debt to its balance sheet in the moderate term, with $6 billion being added by 2019, industry watchers claim.
The current state of affairs suggests Sprint is too leveraged as the Overland Park, Kansas-based mobile service provider continues to add more debt than equity and is thus seen as a risky investment. It's currently unclear whether the firm's poor financial performance will significantly affect its business in the short term, but it certainly won't help its efforts to take back the title of the third largest wireless carrier in the United States that it lost to T-Mobile a few years back. T-Mobile may actually be the solution to Sprint's problems if SoftBank — the majority owner of Sprint — manages to fulfill its long-held ambitions and purchase T-Mobile in an effort to merge it with Sprint and create a new telecom giant that would be more capable of competing with AT&T and Verizon.
A merger of Sprint and T-Mobile has been rumored about for many years but was next to impossible to realize under the former Obama administration. However, following the arrival of President Trump, both the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC) became more open towards major consolidations in the telecommunications industry, and the same goes for the Department of Justice (DOJ). Given recent developments, a merger between the two firms would now theoretically be possible if SoftBank is still interested in buying and Deutsche Telekom can be persuaded to sell, though even if both parties would be interested in such a deal, Sprint's current financial issues could already spell trouble for the company in the short term. Overall, the Kansas-based wireless carrier cannot rely on its parent company merging it with its main competitor to solve its current woes and will likely have to do something on its own.