Sprint to borrow $3.5bn on spectrum
Sale and leaseback deal will allow Sprint to borrow $3.5bn with 1,900 and 2,500MHz spectrum as security
Sprint has set up three spectrum subsidiaries to act as security for $3.5 billion worth of loans.
The three units will own 14% of Sprint’s spectrum and lease it back to the company. All the spectrum involved in the deal is in the 1,900 and 2,500MHz range.
Sprint, majority owned by Japanese company SoftBank, said: “The spectrum portfolio is currently utilised by approximately 77% of all of Sprint’s 2.5GHz enabled sites and approximately 33% of Sprint’s 1.9GHz enabled sites.”
The portfolio will be leased back to Sprint in a long-term lease agreement. Sprint will pay rent for the spectrum, and the rent will service the loans. The company says that according to an independent third-party valuation the spectrum is work $16.4 billion.
The deal, expected to close in early November, is the latest in a programme that Sprint hopes will raise $7 billion. In November 2015 the company carried out a sale and leaseback deal on phone inventory that raised $1.1 billion, and in April 2016 it sold and leased back network equipment to raise another $2.2 billion.
“The notes are expected to be rated investment grade by both Moody’s and Fitch,” said Sprint.