Sprint Nextel Raises $4 Billion to Modernize Network

The nation’s third largest mobile network operator, Sprint Nextel has raised $4 billion in a debt offering. Financial Times’ Technology section reported that it is the first step in the company’s plan to close an estimated $5 billion to $7bn funding requirement, as it seeks to modernize its network and perhaps fund Clearwire, its WiMax network partner.

According to Financial Times’ reporter Paul Taylor, “The successful debt offering, comprising $3 billion of seven-year nine percent notes and $1 billion of 10-year, 11.5 percent notes, should also help ease concerns about Sprint Nextel”s continuing access to the capital markets.

Joe Euteneuer, Sprint Nextel’s chief financial officer, indicated last month when the company announced its third-quarter results that Sprint would use the bulk of the proceeds of the debt sale to replace $2 billion of 7.3 per cent notes due in 2012 and $1.5 billion of 6.9 percent notes due in 2013.

Financial Times also reported that Sprint, which also faces the cost of subsidizing Apple iPhones that it began offering recently, is expected to seek vendor funding of between $1 billion and $3 billion to cover a portion of its Network Vision project and network upgrade costs, as well as close its remaining funding gap.

Taylor wrote that the operator’s Network Vision project will enable the service provider to support multiple network technologies including LTE, the favored 4G broadband mobile data standard. “Sprint plans to deploy its own LTE network beginning in mid-2012,” wrote Taylor.

In a research note, Jonathan Chaplin, a Credit Suisse analyst, wrote, “We thought Sprint needed to raise $6 billion to fully fund $4 billion in maturities as well as an aggressive iPhone push and Network Vision.” He added, “Sprint will probably close the remaining gap with vendor financing. We expect the company to close this financing early in first quarter 2012,” reported Taylor.