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Speaker 1: Global business news twenty four hours a day at Bloomberg

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Speaker 1: dot Com, the Radio, plus Lobola and on your radio.

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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.

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Speaker 1: I'm Katherine Cowdery. Stocks fell, dragging the SMP five hundred

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Speaker 1: two a three week low. Economic concerns resurfaced after China

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Speaker 1: and the UK reported weaker than forecast factory data that

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Speaker 1: sent commodity shares lower, with energy producers falling the most

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Speaker 1: in eight weeks. As crude oil retreated, Apple snapped its

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Speaker 1: longest losing streak since nine eight, and fires A rallied

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Speaker 1: after it boosted its outlook. We chal the markets every

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Speaker 1: fifteen minutes. Dow Industrial laverage fell one hundred forty points

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Speaker 1: three quarters of a percent to close out the session

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Speaker 1: at seventeen thousand, seven hundred fifty. SMP five thundered down

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Speaker 1: eighteen point seven eighth of a percent to close at

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Speaker 1: two thousand sixty three. Then as to Act declined fifty

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Speaker 1: four points one point one percent to forty seven sixty three.

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Speaker 1: West Texas Center Media crude oil down a dollar fourteen

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Speaker 1: of barrel two and a half percent to forty three

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Speaker 1: sixty four. Spout gol down seven dollars ten cents a

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Speaker 1: seventy treasury seconds with the yield of one point at seven.

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Speaker 1: And that's a Bloomberg business flash. You're listening to taking

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Speaker 1: stock with Gods and Pim Fox on Bloomberg Radio. Sprint

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Speaker 1: the shares of Sprint while they sprint it higher today

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Speaker 1: by more than five percent. Let's find out why we've

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Speaker 1: got John Butler, senior Telecom's analysts for Bloomberg Intelligence. John

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Speaker 1: always a pleasure. Thanks, I'm great. You know, I would

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Speaker 1: imagine that many investors in Sprint are feeling a little

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Speaker 1: good today, although you know it's been a rough ride

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Speaker 1: for them. Tell me what's going on in Sprint. They

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Speaker 1: talk about reducing capital spending us on, but what's the

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Speaker 1: business like at Sprint? Yes, Sprints. Sprints a complex story.

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Speaker 1: It's the underdog in the space. It's the fourth largest

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Speaker 1: carrier in the US. They're undergoing two things at once.

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Speaker 1: They're doing a large network nationwide upgrade. I use their

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Speaker 1: greatest asset, which is this high frequency two point five

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Speaker 1: gigger hurt spectrum. And it's a complex upgrade because high

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Speaker 1: frequencies like that don't travel very far, but they carry

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Speaker 1: lots of data, and as you go down to lower spectrum,

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Speaker 1: it goes much further in terms of transmission distance, but

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Speaker 1: it doesn't carry as much. So Sprint is upgrading cities

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Speaker 1: with this high frequency spectrum. Uh At the end of

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Speaker 1: the day, they want to market at as having the

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Speaker 1: fastest network in the US, and they may have a

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Speaker 1: good shot at that. Concurrent with that network upgrade, they're

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Speaker 1: doing a pretty major restructuring at the company. They're trying

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Speaker 1: to take two billion in costs out of the operation.

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Speaker 1: I have to say that part of the story is

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Speaker 1: playing out very well. Um. They're on track to do

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Speaker 1: to have all two billion out of the business a

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Speaker 1: year from now by the end of next March UM

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Speaker 1: and are on track to do that. Uh So it's

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Speaker 1: an interesting story and it's a story that continues to

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Speaker 1: get better. The one thing I'm worried about, we heard

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Speaker 1: this today on the conference call, is that they're building

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Speaker 1: out that high frequency spectrum using what are called small cells.

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Speaker 1: So they're putting in these mini cell sites along city blocks,

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Speaker 1: on rooftops all that, and the it's it's killer trying

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Speaker 1: to get these municipal rights away. And so they've had

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Speaker 1: delaze there which is pushing out the capital spending, which

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Speaker 1: means the the actual upgrade of the network, and those

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Speaker 1: plans are getting pushed out a bit to next year,

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Speaker 1: which is not to say it's not going on, but

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Speaker 1: we're having a push out, which is never good for

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Speaker 1: any stock. So, John, you talk about taking two billion

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Speaker 1: dollars of costs that I want to hear more about this,

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Speaker 1: this very ambitious project, But two billion dollars out of

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Speaker 1: a company? How many workers can you lay off? What

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Speaker 1: was so redundant? It's just it's it's mind boggling. Well,

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Speaker 1: you know, it's hard to believe until you go out

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Speaker 1: to visit Sprint in Kansas City. They have a massive

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Speaker 1: campus out there, um, and they were once a much

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Speaker 1: larger carrier, and so they need to right size this

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Speaker 1: organization in line with the current revenue run rate um.

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Speaker 1: You know, and I frankly I think they'll do it.

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Speaker 1: There's lots of areas where you can take out cost.

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Speaker 1: It's very expensive to run a telecom network. As you

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Speaker 1: lose subscribers and you get smaller because you're losing share,

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Speaker 1: you can, as you alluded to Kathleen, you can reduce personnel.

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Speaker 1: Uh in terms of the campus. I know they've been

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Speaker 1: leasing parts of the campus to third parties and reducing

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Speaker 1: their footprint out there. Um, they don't share a whole

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Speaker 1: lot in terms of specifics, in terms of where they're cutting,

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Speaker 1: in what they're doing. I do know this. They turned

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Speaker 1: to every line manager in Sprint and said, we want

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Speaker 1: you to come back to us with a plan on

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Speaker 1: how you would cut x per cent of costs. I

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Speaker 1: forget what the percent was. So it really is an

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Speaker 1: organization wide effort at Sprint. And you know, Uh, the

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Speaker 1: CFO was speaking recently, not on the call today, but

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Speaker 1: I heard him recently, and he said, we have identified

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Speaker 1: every single area where we're going to take costs out,

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Speaker 1: so we know where that two billion dollars is coming from.

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Speaker 1: It's really just a matter of time to execute on that.

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Speaker 1: You can't do it all at once. Hey, John, you

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Speaker 1: know you mentioned that two point five giga hurts UH

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Speaker 1: spectrum that Spring has, right and right. I don't want

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Speaker 1: to get two geeky on all this, but there is

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Speaker 1: an auction that is coming up at the end of

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Speaker 1: the month and it has to do with low band spectrum, right,

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Speaker 1: So just explain to people this low band spectrum, uh,

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Speaker 1: maybe easier, right, I mean, it can travel, as you said,

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Speaker 1: longer distances, and it also penetrates buildings better than the

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Speaker 1: higher band spectrum. And that PIM is a very key point.

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Speaker 1: Spectrum has different properties depending on where you are in

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Speaker 1: the electromagnetic spectrum. In this case, we're talking about radio waves.

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Speaker 1: You know, as we move into a data centric world,

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Speaker 1: those higher frequencies are gaining in value because people want

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Speaker 1: fast download speeds, but the reality is they also want

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Speaker 1: service when they're in building. The early cellular networks were

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Speaker 1: built with that low frequency spectrum. It was given to

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Speaker 1: mobile carriers. It was also given to broadcasters who were

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Speaker 1: broadcasting analog signals. Remember analog TV PIM And so analog

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Speaker 1: takes up a much bigger, larger amount of spectrum than digital,

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Speaker 1: and so as they move to digital, there's free spectrum there.

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Speaker 1: It's going up for grabs and it's a very valuable asset.

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Speaker 1: Um T Mobile is the one that needs that low

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Speaker 1: band the most. They are going to be most aggressive

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Speaker 1: in this auction a T and TM Verizon have the

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Speaker 1: most in their portfolio, and Sprint is setting it out

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Speaker 1: because they just don't have the money. So all right,

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Speaker 1: John Butler thank you so very much. Joining us from

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Speaker 1: Bloomberg Intelligence PIMA. We gotta wrap it up here in

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Speaker 1: San Francisco, home of Bloomberg nine six Radio, you're listening

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Speaker 1: to taking Stock. I'm Pim Fox, my co host Kathleen Hayes,

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