Welcome!

Mobile IoT Authors: Elizabeth White, Liz McMillan, Peter Silva, Teridion Blog, Dana Gardner

News Feed Item

Fitch Maintains Sprint Nextel on Rating Watch Positive

Fitch Ratings maintains the following ratings for Sprint Nextel Corporation (Sprint Nextel) and its subsidiaries on Rating Watch Positive:

Sprint Nextel

--Issuer Default Rating (IDR) 'B+';

--Senior unsecured credit facility 'BB/RR2';

--Junior guaranteed unsecured notes 'BB/RR2';

--Senior unsecured notes 'B+/RR4'.

Sprint Capital Corporation

--IDR 'B+';

--Senior unsecured notes 'B+/RR4'.

Nextel Communications Inc. (Nextel)

--IDR 'B+'.

Fitch has maintained the Rating Watch Positive after Sprint Nextel entered into a definitive agreement to acquire the approximate 50% stake in Clearwire Corp. it currently does not own for $2.2 billion. Sprint Nextel will also provide a loan of up to $800 million in interim financing in the form of exchangeable notes, which will be exchangeable under certain conditions for Clearwire class B common stock. Under the financing agreement, Sprint has agreed to purchase $80 million of exchangeable notes per month for up to 10 months beginning in January 2013. The transaction will require regulatory approval and a majority of non-Sprint owned Clearwire shares. The Clearwire acquisition, which is contingent on the Softbank transaction finalizing, is expected to close mid-2013 at approximately the same time as Softbank.

Fitch believes Clearwire's spectrum assets are integral to Sprint Nextel's long-term LTE plans by solving the need for high capacity spectrum in its urban cores. This strengthens Sprint's competitive position and ability to differentiate unlimited wireless broadband offerings from its national peers. As such, Fitch views this strategically as a positive event since the acquisition would give Sprint Nextel complete control of Clearwire's spectrum and allow Sprint to fully integrate Clearwire assets into its network. Thus the transaction eliminates future equity contributions, reduces inefficient operating expenses and facilitates the execution of its strategic plans.

From a credit profile perspective, pro forma leverage would increase to over 5x. Given the increase in leverage, the prospects for a ratings upgrade to 'BB-' once the two acquisitions close have potentially diminished. Sprint's execution on stated network objectives and whether the company can demonstrate further operational and financial improvements in the coming quarters despite the increased competitive intensity has elevated importance. Material uncertainty also still exists with Sprint's post-transaction capital structure plans and uses for Softbank's capital infusion which will be a key factor in the final rating decision.

Uncertainty exists whether non-Sprint Clearwire shareholders will approve the transaction. Fitch believes Clearwire's stand-alone prospects were bleak due to its constrained liquidity, limited access to new capital and inability to attract major new customers. Over time, as consolidation has removed potential wholesale partners and operators have become more efficient with spectrum assets through acquisition and swaps, the industry has obviated the need for a wholesale operator. Clearwire's lack of additional strategic agreements with other operators, limited market access and substantial funding gap left the company heavily reliant on Sprint Nextel for further funding.

Absent Clearwire shareholder approval, a financial restructuring of Clearwire is quite possible. This would have significant implications and risks for Clearwire's stakeholders with an uncertain outcome. In addition, a financial restructuring would introduce material uncertainty with Sprint's longer-term network and spectrum plans. Clearwire was expected to begin supplying Sprint with hotspot capacity for its LTE network beginning in mid-2013.

Fitch now views Sprint Nextel's liquidity as strong despite the significant cash requirements expected through at least 2013. In addition to the expected $8 billion from Softbank, Sprint Nextel's liquidity position is supported by $6.3 billion of cash and $1.2 billion borrowing capacity under its $2.2 billion revolving credit agreement at the end of the third quarter 2012. Fitch expects Sprint Nextel will consider parameters for a new facility in early 2013 given the October 2013 maturity. Approximately $423 million is also available through May 31, 2013 under the first tranche of the secured equipment credit facility. The incremental Softbank investment has afforded Sprint Nextel considerable financial flexibility to address refinancing requirements and strategic investments which the company has demonstrated in the past two months.

Sprint has significantly improved its maturity profile as a result of debt issuances in the past year and reduced refinancing risk in the midst of a capital intensive period. In mid-2011, Sprint had $8 billion in debt maturities during the next four years, including $2.3 billion in 2012, $1.8 billion in 2013, and $1.4 billion in 2014. For the third quarter 2012, pro forma for the November $2.3 billion debt issuance, Sprint has approximately $1 billion in debt maturities during the next three years including $317 million in 2013, $198 million in 2014 and $500 million in 2015.

WHAT COULD TRIGGER A RATING ACTION

Negative: The ratings are on a Rating Watch Positive. As a result, Fitch's sensitivities do not currently anticipate developments with a material likelihood, individually or collectively, of leading to a rating downgrade.

Positive: The ratings are on a Rating Watch Positive. Future developments that may, individually or collectively lead to positive rating action include:

--Completion of Softbank merger and expected uses for the $8 billion cash injection.

--Plans for post-close capital structure.

--The degree of operational, strategic, and legal linkage between Softbank and Sprint Nextel.

--Trends associated with operating performance for postpaid subscribers, churn, and ARPU.

--Sprint Nextel's continued progress with network modernization plans including cost improvements and LTE network deployment.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 8, 2012);

--'Rating Global Telecom Companies: Sector Credit Factors' (Aug. 9, 2012).

Applicable Criteria and Related Research:

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

Rating Telecom Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682323

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
SYS-CON Events announced today Telecom Reseller has been named “Media Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Telecom Reseller reports on Unified Communications, UCaaS, BPaaS for enterprise and SMBs. They report extensively on both customer premises based solutions such as IP-PBX as well as cloud based and hosted platforms.
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
For basic one-to-one voice or video calling solutions, WebRTC has proven to be a very powerful technology. Although WebRTC’s core functionality is to provide secure, real-time p2p media streaming, leveraging native platform features and server-side components brings up new communication capabilities for web and native mobile applications, allowing for advanced multi-user use cases such as video broadcasting, conferencing, and media recording.
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
Pulzze Systems was happy to participate in such a premier event and thankful to be receiving the winning investment and global network support from G-Startup Worldwide. It is an exciting time for Pulzze to showcase the effectiveness of innovative technologies and enable them to make the world smarter and better. The reputable contest is held to identify promising startups around the globe that are assured to change the world through their innovative products and disruptive technologies. There w...
Is the ongoing quest for agility in the data center forcing you to evaluate how to be a part of infrastructure automation efforts? As organizations evolve toward bimodal IT operations, they are embracing new service delivery models and leveraging virtualization to increase infrastructure agility. Therefore, the network must evolve in parallel to become equally agile. Read this essential piece of Gartner research for recommendations on achieving greater agility.
Akana has announced the availability of version 8 of its API Management solution. The Akana Platform provides an end-to-end API Management solution for designing, implementing, securing, managing, monitoring, and publishing APIs. It is available as a SaaS platform, on-premises, and as a hybrid deployment. Version 8 introduces a lot of new functionality, all aimed at offering customers the richest API Management capabilities in a way that is easier than ever for API and app developers to use.
DevOps at Cloud Expo, taking place Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long dev...
Personalization has long been the holy grail of marketing. Simply stated, communicate the most relevant offer to the right person and you will increase sales. To achieve this, you must understand the individual. Consequently, digital marketers developed many ways to gather and leverage customer information to deliver targeted experiences. In his session at @ThingsExpo, Lou Casal, Founder and Principal Consultant at Practicala, discussed how the Internet of Things (IoT) has accelerated our abil...
SYS-CON Events announced today that 910Telecom will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Housed in the classic Denver Gas & Electric Building, 910 15th St., 910Telecom is a carrier-neutral telecom hotel located in the heart of Denver. Adjacent to CenturyLink, AT&T, and Denver Main, 910Telecom offers connectivity to all major carriers, Internet service providers, Internet backbones and ...
With so much going on in this space you could be forgiven for thinking you were always working with yesterday’s technologies. So much change, so quickly. What do you do if you have to build a solution from the ground up that is expected to live in the field for at least 5-10 years? This is the challenge we faced when we looked to refresh our existing 10-year-old custom hardware stack to measure the fullness of trash cans and compactors.
The emerging Internet of Everything creates tremendous new opportunities for customer engagement and business model innovation. However, enterprises must overcome a number of critical challenges to bring these new solutions to market. In his session at @ThingsExpo, Michael Martin, CTO/CIO at nfrastructure, outlined these key challenges and recommended approaches for overcoming them to achieve speed and agility in the design, development and implementation of Internet of Everything solutions wi...
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
SYS-CON Events announced today that Venafi, the Immune System for the Internet™ and the leading provider of Next Generation Trust Protection, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Venafi is the Immune System for the Internet™ that protects the foundation of all cybersecurity – cryptographic keys and digital certificates – so they can’t be misused by bad guys in attacks...
Smart Cities are here to stay, but for their promise to be delivered, the data they produce must not be put in new siloes. In his session at @ThingsExpo, Mathias Herberts, Co-founder and CTO of Cityzen Data, will deep dive into best practices that will ensure a successful smart city journey.
In today's uber-connected, consumer-centric, cloud-enabled, insights-driven, multi-device, global world, the focus of solutions has shifted from the product that is sold to the person who is buying the product or service. Enterprises have rebranded their business around the consumers of their products. The buyer is the person and the focus is not on the offering. The person is connected through multiple devices, wearables, at home, on the road, and in multiple locations, sometimes simultaneously...
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - comp...
Amazon has gradually rolled out parts of its IoT offerings in the last year, but these are just the tip of the iceberg. In addition to optimizing their back-end AWS offerings, Amazon is laying the ground work to be a major force in IoT – especially in the connected home and office. Amazon is extending its reach by building on its dominant Cloud IoT platform, its Dash Button strategy, recently announced Replenishment Services, the Echo/Alexa voice recognition control platform, the 6-7 strategic...
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....