Research methods unit VI Scholarly Activity and DQ Question

A Pr ogressive Digital Media b usiness COMP ANY PR OFILE Sprint Corporation REFERENCE CODE: 8613378D-5CF0-49B7-93F8-346EE511D261 PUBLICA TION D ATE: 31 Dec 2015 www .marketline .com COPYRIGHT MARKETLINE. THIS CONTENT IS A LICENSED PR ODUCT AND IS NO T TO BE PHO TOCOPIED OR DISTRIB UTED . TABLE OF CONTENTS Compan y Over vie w.............................................................................................. 3 Key F acts ............................................................................................................... 3 SW OT Anal ysis ..................................................................................................... 4 Spr int Cor por ation Page 2 © Mar ketLine Sprint Corporation TABLE OF CONTENTS COMP ANY O VER VIEW Spr int Cor por ation (Spr int or “the compan y”) is a comm unications ser vices compan y engaged in off ering a r ange of wireless and wireline comm unications products and ser vices to consumers , businesses , go vernment subscr ibers and resellers .The compan y pr imar ily oper ates in the US where it is headquar tered in Ov erland P ark, Kansas and emplo yed about 31,000 people as on March 31, 2015.

The compan y recorded re ven ues* of $34,532 million dur ing the financial y ear ended March 2015 (FY2015). The oper ating loss of the compan y w as $1,895 million in FY2015. Its net loss w as $3,345 million in FY2015.

*Spr int Cor por ation is a successor compan y to Spr int Ne xtel Cor por ation (predecessor). The compan y merged with SoftBank in 2013. In order to align with SoftBank’ s repor ting schedule , the compan y changed its fiscal y ear end to March 31. As a result of financial tr ansactions at the time of SoftBank merger , the financial results of the predecessor are diff erent from the successor .Theref ore , the y are not compar ab le.The re ven ues co vered in this repor t are of the successor compan y. KEY F A CTS Spr int Cor por ation Head Office 6200 Spr int P arkw ay Ov erland P ark Kansas USA 1 855 848 3280 Phone Fax http://www .spr int.com Web Ad dress 34,532.0 Re ven ue / turno ver (USD Mn) December Financial Year End 31,000 Emplo yees S Ne w York Tic ker Spr int Cor por ation Page 3 © Mar ketLine Sprint Corporation Compan y Ov ervie w SW O T ANAL YSIS Spr int Cor por ation (Spr int or “the compan y”) is a comm unications ser vices compan y engaged in off ering a r ange of wireless and wireline comm unications products and ser vices to consumers , businesses , go vernment subscr ibers and resellers . Spr int is the third largest telecom pro vider in the US with large subscr iber base , netw ork and spectr um, which will enab le it to tap into the emerging oppor tunities . Ho wever, the impending satur ation and limited a vailability of spectr um will impact Spr int's g rowth prospects . Weaknesses Strengths Dela yed f oray into 4G L TE ser vices Third largest telecom pro vider in the US High debt Spr int's acquisition b y SoftBank Declining ARPU Threats Oppor tunities High penetr ation r ates and increased chur n in wireless segment Netw ork moder nization Strong outlook f or high-bandwidth mobile comm unications Intense competition in the wireless telecom mar ket Rising demand f or the smar tphones and the tab lets Changes in regulations ma y aff ect b usiness prospects Strengths Third largest telecom pro vider in the US Spr int enjo ys significant mar ket position in the US telecom mar ket. The compan y is the third largest wireless comm unication pro vider in the US mar ket based on wireless re ven ue .The compan y is also one of the largest pro viders of wireline long distance ser vices , and one of the largest inter net carr iers in the US .While its competitors A T&T and Verizon are consider ab ly large companies , Spr int although significantly smaller in siz e has a large addressab le mar ket. The compan y b y the end of FY2015 had 57.1 million wireless subscr ibers of which 30.1 million w ere postpaid, 16.1 million w ere prepaid subscr ibers , and 11 million w ere wholesale and affiliates subscr ibers .The compan y is also among the f ew telecom companies that enjo y a nationwide wireless netw ork.The compan y w as ab le to maintain the nationwide reach b y not only oper ating its o wn digital netw ork b ut also b y enter ing into commercial ag reements with third par ty affiliates . Additionally to enhance its reach, Spr int off ers roaming on other pro viders' netw orks. Spr int Cor por ation Page 4 © Mar ketLine Sprint Corporation SW OT Analysis Moreo ver, the compan y o wns Clearwire , which off er f our th gener ation (4G) w orldwide interoper ability for micro wave access (WiMAX) ser vices in cer tain mar kets in the US .The compan y also has access to spectr um licenses across the US .The compan y holds 800 megaher tz (MHz), 1.9 gigaher tz (GHz) and 2.5 GHz licenses author izing the use of r adio frequency spectr um to deplo y its wireless ser vices . Despite disadv antages associated with siz e and scale , Spr int with its large addressab le subscr iber base , spectr um and nationwide netw ork reach is equipped to le verage these f actors to def end its mar ket position. Additionally , the compan y has a strong base to implement ne w str ategies to enhance reven ues and profitability . Its large subscr iber base , netw ork and spectr um will enab le Spr int to tap into the emerging oppor tunities . Spr int's acquisition b y SoftBank In 2013, SoftBank, a J apanese telecomm unications and inter net compan y, in vested $22.2 billion in Spr int f or an 80% stak e in the compan y.The acquisition strengthened Spr int's balance sheet and pro vided capital f or contin ued in vestment in the moder nization of its netw ork, which w ould allo w Spr int to upg rade its technology , e xpand its ser vice off erings and impro ve the quality and reliability of its product off erings . It also allo wed Spr int to le verage SoftBank's oper ational and technological exper tise in smar tphones and ne xt-gener ation mobile netw orks to enhance its competitiv eness in the US . Fur ther more , the ne w combined entity is w ell positioned to le verage its siz e to procure equipment and phones at f avorab le pr ices .The siz e also allo ws the compan y to f avorab ly negotiate better ter ms with or iginal equipment man ufacturers (OEMs) such as Apple , and cross-pollinate best practices . SoftBank acquisition positioned the compan y as a stronger pla yer in the US telecomm unications industr y, enab ling it to add ne w customers and enhance its mar ket share . Fur ther , SoftBank's in vestment is e xpected to enab le Spr int to benefit from SoftBank's leadership in L TE and impro ve the oper ating scale and create oppor tunities f or collabor ativ e inno vation in consumer ser vices and applications . W eaknesses Dela yed f oray into 4G L TE ser vices Spr int is lagging behind its peers in the 4G L TE roll out. The latest L TE based 4G technology w as utiliz ed b y the telecom industr y from FY2010 onw ards .Verizon w as the first pla yer to off er the 4G LTE mar ket in 2010 f ollo wed b y A T&T and consequently these companies ha ve a significant lead. The y ha ve b uilt a strong presence across the US and Spr int Ne xtel is lagging behind, being a late entr ant. The compan y will f ace an uphill task while tr ying to acquire customers f or its 4G L TE ser vices . High debt The compan y is highly le veraged. At the end of FY2015, the compan y’s consolidated pr incipal amount of indebtedness w as $32.7 billion, and had $3.3 billion of un used borro wing capacity .The compan y recorded a debt equity r atio of 1.5 times in FY2015 and an interest e xpense of $2,051 million. The compan y’s high debt le vels and debt ser vice requirements are significant in relation to Spr int Cor por ation Page 5 © Mar ketLine Sprint Corporation SW OT Analysis its re ven ues and cash flo w, which ma y reduce Spr int’ s ability to respond to competition and economic trends in the industr y or in the econom y. In addition, the compan y’s re volving bank credit f acility and other financing f acilities also require that Spr int maintain cer tain financial r atios , including a le verage ratio , which could limit the compan y’s ability to incur additional debt. Spr int’ s f ailure to comply with debt co venants w ould tr igger def aults under those ob ligations , which could result in the matur ities of those debt ob ligations being acceler ated and could in tur n result in cross def aults with other debt ob ligations . Limitations on Spr int’ s ability to obtain suitab le financing when needed, or at all, could result in an inability to contin ue to e xpand the b usiness , timely e xecute netw ork moder nization plans , and meet competitiv e challenges . High debt limits the compan y's ability to r aise fur ther capital to fund its g rowth. Additionally , the compan y also has high debt ser vicing ob ligations making its cash flo ws highly vulner ab le fur ther impacting its ability to fund g rowth inter nally . High outstanding debt increases the compan y's financial risk.

Declining ARPU Spr int witnessed as significant decline in its a verage re ven ue per user (ARPU) per month dur ing 2013-15. The successor compan y’s postpaid ARPU declined from $63.5 in FY2013 to $59.3 in FY2015 representing a compound ann ual r ate change (CARC) of 3% dur ing the same per iod. Fur ther , the a verage retail ARPU of the compan y declined at a CARC of 2% dur ing 2013-15 from $50.9 in FY2013 to $48.7 in FY2015. The decline in postpaid ARPU w as attr ibuted to g rowth in sales of tab lets , which carr y a lo wer re ven ue per subscr iber combined with the impact of subscr iber mig ration to man y of the compan y’s ne w ser vice plans , resulting in lo wer ser vice f ees . Declining ARPU w ould fur ther put pressure on Spr int’ s profitability . Oppor tunities Netw ork moder nization The compan y is in the process of moder nizing its netw ork to allo w the consolidation and optimization of its 800 MHz, 1.9 GHz and 2.5 GHz spectr um into its base stations .The compan y emplo yed netw ork moder nization prog ram, which contr ibuted to impro vement in chur n r ates , enhanced the netw ork quality and led to a decline in the ser vice disr uptions . As par t of this prog ram, the compan y modified its e xisting bac khaul architecture to enab le increased capacity to the netw ork at a lo wer cost b y utilizing Ether net as opposed to time division m ultiple xing (TDM) technology . As par t of the prog ram, the compan y will upg rade the e xisting Spr int platf orm that will enab le it to off er 4G technologies , including L TE. Fur ther , the compan y's acquisition of Clearwire catalyz ed its f oray into 4G mobile broadband. The compan y fur ther intends to contin ue to optimiz e its 3G data netw ork and invest in L TE deplo yment across all spectr um bands . In addition, Spr int entered into 4G L TE ag reements with 15 additional r ural and regional netw ork carr iers as par t of the Rur al Roaming Pref erred Pro vider prog ram, in September 2014. Spr int Cor por ation Page 6 © Mar ketLine Sprint Corporation SW OT Analysis According to the industr y estimates , the adoption of 4G and L TE is e xpected to increase e xponentially . The estimates indicate that the 4G/L TE smar tphone shipments will g row rob ustly in coming y ears . The US is e xpected to contr ibute significantly to this g rowth, indicating a strong mar ket f or 4G and LTE ser vices in the US . Netw ork moder nization will enab le the compan y to sustain mar ket share as the subscr ibers mo ve to increased adoption of L TE and 4G ser vices . It also enhances the competitiv e position as its peers lik e A T&T and Verizon had a long lead with 4G ser vices . As the v oice ser vices mar ket in the US reaches matur ity, the increase in data re ven ues is e xpected to enhance the g rowth prospects f or telecom companies including Spr int. Strong outlook f or high-bandwidth mobile comm unications The US mobile broadband mar ket had g rown strongly o ver the histor ical per iod and is e xpected to contin ue g rowing in the coming per iod. The g rowth in mobile broadband is pr imar ily attr ibutab le to the high data consumption b y mobile de vices , including smar tphones and tab lets . According to industr y estimates , global mobile data tr affic is projected to g row at a CA GR of 57% dur ing 2014-19, to 24.3 e xab ytes per month b y 2019. Fur ther , 4G connections are e xpected to account f or 26% of total mobile connections b y 2019. Spr int has rob ust netw ork infr astr ucture to suppor t the g rowing demand f or high-bandwidth mobile comm unications .The compan y is in the process of moder nizing its netw ork to allo w the consolidation and optimization of its 800 MHz, 1.9 GHz and 2.5 GHz spectr um into its base stations . Moreo ver, major ity of eff orts to roll out 4G L TE on its 800 MHz and 2.5 GHz spectr um bands are e xpected to be completed b y the end of 2015. The compan y can le verage its leadership position in the wireless mar ket to fur ther dr ive ARPUs b y tapping into the trend of g rowing mobile tr affic. Rising demand f or the smar tphones and the tab lets Spr int will benefit from the r ising demand f or smar tphones and tab lets in the US . According to industr y estimates , the tab let shipments are e xpected to g row at a CA GR 5.4% dur ing 2014-18 to reach 285.9 million units in 2018. Smar tphones and tab lets are e xpected to constitute 87% of the total connected de vice mar ket b y 2018. Fur ther , the smar tphones mar ket increased b y 19.3% to reach a total of 1.2 billion units shipped in 2014. It is also estimated that the total smar tphone shipments will reach 1.7 billion units in 2018, representing a CA GR of 11.5%. Mirror ing the global trend, the tab let users in the US are e xpected to contin ue to r ise .With a r ange of smar tphones and tab lets , Spr int is w ell poised to e xploit the demand f or these data intensiv e mobile de vices which will enab le the compan y to enhance re ven ues . Threats High penetr ation r ates and increased chur n in wireless segment The wireless mar kets in the US are satur ated. The penetr ation r ate of the US mar ket is more than 110%, with more connections than the population and the mar ket is considered to be satur ated. Spr int Cor por ation Page 7 © Mar ketLine Sprint Corporation SW OT Analysis Hence , the compan y needs to acquire ne w subscr ibers from its competitors r ather than the first time subscr ibers in order to e xpand the b usiness . Star ting from 2008 to 2015, the compan y e xper ienced a net decrease in the retail postpaid subscr iber base of appro ximately 12.7 million subscr ibers . As the wireless industr y contin ues to mature , the future wireless g rowth will increasingly depend on Spr int's ability to off er inno vativ e data ser vices to customers , which in tur n, will depend on the availability of additional spectr um. The spectr um and capacity constr aints will increase in the coming years as mobile data tr affic increases at a rob ust pace .While Spr int contin ues to in vest significant capital in e xpanding its netw ork capacity , the capacity constr aints could aff ect the quality of e xisting voice and data ser vices and the ability to launch ne w, adv anced wireless broadband ser vices . An y spectr um solution will require that the F eder al Comm unications Commission (FCC) mak es ne w spectr um a vailab le to the wireless industr y and allo w the compan y to obtain the spectr um it needs more immediately to meet the needs of its customers .The impending satur ation and limited a vailability of spectr um will impact Spr int's g rowth prospects . Intense competition in the wireless telecom mar ket The compan y f aces substantial and increasing competition in all aspects of its wireless b usiness . Under current FCC r ules , m ultiple licensees , including six or more personal comm unication ser vice (PCS) licensees , tw o cellular licensees and one or more enhanced specializ ed mobile r adio licensee ma y oper ate in each of Spr int's ser vice areas , which results in the potential presence of m ultiple competitors .The compan y has m ultiple wireless competitors in each of its ser vice areas and competes for customers based pr incipally on ser vice/de vice off erings , pr ice , call quality , co verage area and customer ser vice .The compan y's competitors include companies such as Verizon Wireless , A T&T and T-Mobile USA, TracF one Wireless , and Centur yLink, as w ell as v arious regional wireless ser vices pro viders . In addition, Spr int f aces competition from pro viders that off er v oice , te xt messaging and other ser vices as applications on data netw orks. More than 97% of the US population liv es in areas with at least three mobile telephone oper ators , and 90% of the population liv es in areas with at least five competing carr iers .This mak es the compan y's en vironment highly competitiv e. Moreo ver, the US wireless industr y is e xpected to witness pr ice competition in the coming y ears . All the pla yers in the US telecoms space ha ve either introduced ne w plans or cut pr ices to poach subscr ibers in an increasingly satur ated postpaid mar ket. For instance , T-Mobile introduced a n umber of plans to lure customers from the dominant pla yers . As par t of its campaign, T-Mobile star ted pro viding financing f or phones and other pac kages , including cheap inter national r ates and appro ximately $650 to people who s witch ser vice .To counter the str ategy of T-Mobile , other pla yers in the mar ket ha ve also lo wered the pr icing of some of their plans . For instance , in 2014, A T&T lowered its monthly f ee f or 10 gigab ytes monthly data share plan to $15 per de vice , from $40. According to industr y estimates , this is the first step in the impending pr ice w ar across the industr y and other pla yers w ould be f orced to cut pr ices to retain subscr ibers . Increasing competition coupled with impending pr ice competition will contin ue to put pressure on pricing and margins as companies compete f or potential customers . Changes in regulations ma y aff ect b usiness prospects Spr int Cor por ation Page 8 © Mar ketLine Sprint Corporation SW OT Analysis The compan y's domestic oper ations are subject to regulation b y the FCC and other f eder al, state and local agencies .These regulator y regimes frequently restr ict the compan y's ability to oper ate in or pro vide specified products or ser vices in designated areas and require the compan y to maintain licenses f or its oper ations . Also , the FCC g rants wireless licenses f or ter ms gener ally lasting 10 years that are subject to rene wal. The loss of , or a mater ial limitation on, cer tain of the compan y's licenses could ha ve a mater ial adv erse eff ect on its wireless b usiness , results of oper ations and financial condition. Moreo ver, the de velopment of ne w technologies , such as IP-based ser vices , including v oice o ver inter net protocol (V oIP) and super high-speed broadband and video , could be subject to conflicting regulation b y the FCC and v arious state and local author ities , which could significantly increase the cost of implementing and introducing ne w ser vices based on this technology . Moreo ver, as a precondition to appro val of the SoftBank Merger , CFIUS required that SoftBank and Spr int enter into a National Secur ity Ag reement (NSA). These pro visions increase the cost of compliance with secur ity measures , and limit Spr int's control o ver cer tain US f acilities , contr acts , personnel, v endor selection and oper ations , which ma y mater ially aff ect its oper ating results . Fur ther more , an y ne w regulations could restr ict the compan y's ability to compete in the mar ketplace and limit the retur n it can e xpect to achie ve on past and future in vestments . Changes in the regulator y frame work under which the compan y oper ates could adv ersely aff ect its b usiness prospects or results of oper ations . Spr int Cor por ation Page 9 © Mar ketLine Sprint Corporation SW OT Analysis Copyright ofSprint Corporation SWOTAnalysis isthe property ofMarketLine, aProgressive Digital Mediabusiness anditscontent maynotbecopied oremailed tomultiple sitesor posted toalistserv without thecopyright holder'sexpresswrittenpermission. However,users may print, download, oremail articles forindividual use.