Sprint Nextel Gets $1 Billion Loan to Finance Equipment Purchase
Deutsche Bank AG helped arrange the secured loan, which will expire in March 2017, Sprint said today in a statement distributed by Business Wire.
The deal with Ericsson is part of the “Network Vision” project, which may be backed by as much as another $2 billion of equipment financing. Alcatel-Lucent (ALU), based in Paris, and South Korea’s Samsung Electronics Co. are Sprint’s two other equipment vendors assigned to the long-term evolution, or LTE, network construction plan, as Sprint tries to catch up with AT&T Inc. (T) and Verizon Wireless in the faster network technology.
“We are still in discussions with the other vendors and we have nothing to announce at this time,” said Scott Sloat, a Sprint spokesman.
Joe Euteneuer, chief financial officer at the Overland Park, Kansas-based company, said on an April 25 earnings call that Sprint’s equipment financing would be between $1 billion to $3 billion.
The LTE push leaves Sprint coping with rising expenses that include a four-year, $15.5 billion contract to sell the iPhone and $10 billion for network expansion over the next two years. Capital spending increased 44 percent to $800 million in the first quarter from the first three months of 2011.
The company expects to have LTE service in six major cities, including Dallas and Baltimore, by mid-year.
In a separate statement today, Sprint said it plans to redeem a portion of its 6.875 percent notes that expire next year.
Sprint rose 2 cents to $2.64 at 12:32 p.m. in New York. That compares with a 52-week high of $6.45 per share and a 52- week low of $2.10, according to data compiled by Bloomberg.
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