Cash-strapped Sprint to raise $2.2bn by flogging off its network hardware

Carrier inks sell-lease deal for hardware

Mobile carrier Sprint says it will raise $2.2bn by selling and then re-lease its own network hardware.

The SoftBank-owned US telco said it will use money from the sale to return to profitability by providing a much-needed infusion of cash, as it works to turn around a business that had become a cash sink.

"Sprint and SoftBank have worked together again to create a unique structure that provides Sprint with an attractive source of capital," Sprint CFO Tarek Robbiati said in announcing the deal.

"This transaction is an important first step in addressing upcoming debt maturities, and allows us to stay focused on our corporate transformation, which involves growing topline revenues and aggressively taking costs out of the business to improve operating cash flows."

Under the deal, Sprint will sell off about $3bn worth of hardware, primarily cellular network towers and mounted equipment, to a new company known as "LeaseCo" to be controlled by its debtors. From there, Sprint will immediately enter into a lease-back deal that will allow it continue using the towers and equipment to keep its network operating as normal.

The result of the deal, Sprint said, is an infusion of cash for the carrier, as well as a low-cost lease on its network hardware. This will, in turn, allow Sprint to bolster its bottom line with cash payments made through 2018.

The cash is needed, as Sprint has been trying to right itself financially following a string of poor financial returns and bungled product launches. Research house Statista estimates that Sprint is currently in a dead heat with rival T-Mobile for market share in the US.

Sprint could also see itself come into possession of additional assets this year as a result of the FCC's latest spectrum auction. Not originally slated to take part in the sell-off, Sprint emerged as a possible contender when SoftBank was reported to be considering an entry. ®