Bloomberg News

Sprint Nextel Gets $1 Billion Loan to Finance Equipment Purchase

May 29, 2012

Sprint Nextel Corp. (S:US), the third- largest U.S. wireless operator, received a $1 billion credit facility to finance the purchase of equipment from Sweden’s Ericsson AB.. (ERIC:US)

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:US), 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:US) 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.

To contact the reporters on this story: Christine Idzelis in New York at cidzelis@bloomberg.net; Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editors responsible for this story: Faris Khan at fkhan33@bloomberg.net; Nick Turner at nturner7@bloomberg.net


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Companies Mentioned

  • S
    (Sprint Corp)
    • $6.8 USD
    • 0.11
    • 1.62%
  • ERIC
    (Telefonaktiebolaget LM Ericsson)
    • $13.12 USD
    • 0.47
    • 3.58%
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