September 17, 2019
Andrew Davies
Chief Financial Officer
Sprint Corp
6200 Sprint Parkway
Overland Park, KS 66251
Re: Sprint Corp
Form 10-K for the Fiscal Year Ended March 31, 2019
Filed May 29, 2019
File No. 001-04721
Dear Mr. Davies:
We have limited our review of your filing to the financial statements
and related
disclosures and have the following comments. In some of our comments, we may
ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have additional
comments.
Form 10-K for the Fiscal Year Ended March 31, 2019
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Network, page 32
1. You disclose on page 32 that you believe you are well-positioned with
spectrum holdings
and that your holdings will allow you to introduce 5G in parallel with 4G
service over the
same 2.5 GHz spectrum band, supporting the early introduction of 5G
devices without
disrupting the capacity needed to support 4G users. You also indicate
that the
introduction of 5G technologies are expected to continue to enhance the
customer
experience and improve network performance for both voice and data
services, especially
in the geographic areas where 5G will be provided. These statements
appear to conflict
with your recent disclosures in your April 15, 2019 FCC public interest
statement, where
you state:
"Sprint has an unfixable lack of sufficient low-band spectrum. Sprint's
spectrum
problem is unfixable because there is no low-band spectrum available
for purchase,
Andrew Davies
FirstName LastNameAndrew Davies
Sprint Corp
Comapany 17, 2019
September NameSprint Corp
September 17, 2019 Page 2
Page 2
FirstName LastName
and none is expected to be available in the near term that could
help Spring as it builds
out a 5G network"; and
"The move to 5G will only exacerbate Sprint's network consistency
problems because
Sprint will not have any low band spectrum deployed for 5G. As a
result, the change
in customer experience as customers drop off its 5G network down
to LTE will be
even more pronounced, and more frustrating, for Sprint's
customers".
Please reconcile these seemingly conflicting statements.
Average Monthly Service Revenue per Subscriber and Subscriber Trends, page 38
2. You disclose in footnote 1 on page 40 that a subscriber is defined as
an individual line of
service associated with each device activated by a customer. Please
revise to quantify the
extent to which your March 31, 2019 end of period subscriber count
included lines that
had been activated but are not being actively used.
3. In footnote 11 on page 40, you disclose that 115,000 wholesale
subscribers were removed
from the subscriber base with no impact to revenue. Please tell us how
you identify these
customers and the types of circumstances that led them to be included
in the subscriber
base despite no contributions to revenue.
4. In your April 15, 2019 FCC public interest statement, you stated
"Sprint's postpaid net
additions recently have been driven by "free lines" offered to Sprint
customers and the
inclusion of less valuable tablet and other non-phone devices, as well
as pre to post
migrations that do not represent "new" Sprint customers...While these
public statements
and the individual metrics cited are all accurate, they are incomplete
and none are a
substitute for a realistic analysis of the key factors that are most
probative of Sprint's
overall competitive position and prospects". Please address the
following:
Describe the ways in which the subscriber metrics provided in your
Form 10-K are
incomplete.
Tell us the specific disclosures in your Form 10-K that provide an
analysis of the "key
factors that are most probative of Sprint's overall competitive
position and prospects".
Please explain the extent to which there are other metrics used by
management to
analyze the business that might be useful for investors to gain a
more accurate view of
relevant trends affecting the Company's liquidity, financial
position, and results of
operations. Please refer to Item 303(a) of Regulation S-K and the
Commission
Guidance Regarding Management s Discussion and Analysis of
Financial Condition
and Results of Operations, Release No. 33-8350.
Andrew Davies
Sprint Corp
September 17, 2019
Page 3
Liquidity and Capital Resources, page 52
5. Your FCC public interest statement dated April 15, 2019 includes
several negative
statements about Sprint's liquidity and ability to continue as a
stand-alone company that
do not seem to be addressed in your liquidity discussion on page 52.
For example:
"Despite minor improvements in a few financial metrics relative to
is own historic
performance, Sprint is not performing well when compared to other
wireless
companies."
"Sprint is in a perilous condition, with limited ability to
extricate itself through means
(such as continued aggressive pricing) within its own
control....Poor network quality,
customer losses and challenge to generate free cash flow have only
become more
pronounced in the year following the announcement of the
[T-Mobile] deal."
"[Sprint's] overall commercial health is poor and declining. Sprint
is highly leveraged
and is not generating sufficient cash flow to service and support
its debt at the same
time as investing adequately in its business."
"Sprint does not generate sufficient cash to fund its network and
operations, and free
cash flow has been overwhelmingly negative. When Sprint has
invested in its
network, its free cash flow has been negative. Indeed, free cash
flow has only been
positive when Sprint has cut network spending to a fraction of
what their competitors
invest in their networks."
"Sprint faces an impending "liquidity wall" as debt maturities for
FY2019-2021 were
$14.7 billion as of year-end 2018 - an amount nearly as great as
what Sprint plans to
spend in capex in the same time period under its plan of record
and even greater than
the liquidity available to fund its short-term operations."
Please tell us how you determined that your MD&A accurately reflects
the severity of
these known trends and uncertainties described in your FCC public
interest statement.
Please refer to Item 303(a) of Regulation S-K.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Lisa Etheredge, Senior Staff Accountant at (202)
551-3424 or Robert
Littlepage, Accounting Branch Chief, at (202) 551-3361 with any questions.
FirstName LastNameAndrew Davies Sincerely,
Comapany NameSprint Corp
Division of
Corporation Finance
September 17, 2019 Page 3 Office of
Telecommunications
FirstName LastName