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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.
Speaker 1: I'm Katherine Cowdery. Stocks fell, dragging the SMP five hundred
Speaker 1: two a three week low. Economic concerns resurfaced after China
Speaker 1: and the UK reported weaker than forecast factory data that
Speaker 1: sent commodity shares lower, with energy producers falling the most
Speaker 1: in eight weeks. As crude oil retreated, Apple snapped its
Speaker 1: longest losing streak since nine eight, and fires A rallied
Speaker 1: after it boosted its outlook. We chal the markets every
Speaker 1: fifteen minutes. Dow Industrial laverage fell one hundred forty points
Speaker 1: three quarters of a percent to close out the session
Speaker 1: at seventeen thousand, seven hundred fifty. SMP five thundered down
Speaker 1: eighteen point seven eighth of a percent to close at
Speaker 1: two thousand sixty three. Then as to Act declined fifty
Speaker 1: four points one point one percent to forty seven sixty three.
Speaker 1: West Texas Center Media crude oil down a dollar fourteen
Speaker 1: of barrel two and a half percent to forty three
Speaker 1: sixty four. Spout gol down seven dollars ten cents a
Speaker 1: seventy treasury seconds with the yield of one point at seven.
Speaker 1: And that's a Bloomberg business flash. You're listening to taking
Speaker 1: stock with Gods and Pim Fox on Bloomberg Radio. Sprint
Speaker 1: the shares of Sprint while they sprint it higher today
Speaker 1: by more than five percent. Let's find out why we've
Speaker 1: got John Butler, senior Telecom's analysts for Bloomberg Intelligence. John
Speaker 1: always a pleasure. Thanks, I'm great. You know, I would
Speaker 1: imagine that many investors in Sprint are feeling a little
Speaker 1: good today, although you know it's been a rough ride
Speaker 1: for them. Tell me what's going on in Sprint. They
Speaker 1: talk about reducing capital spending us on, but what's the
Speaker 1: business like at Sprint? Yes, Sprints. Sprints a complex story.
Speaker 1: It's the underdog in the space. It's the fourth largest
Speaker 1: carrier in the US. They're undergoing two things at once.
Speaker 1: They're doing a large network nationwide upgrade. I use their
Speaker 1: greatest asset, which is this high frequency two point five
Speaker 1: gigger hurt spectrum. And it's a complex upgrade because high
Speaker 1: frequencies like that don't travel very far, but they carry
Speaker 1: lots of data, and as you go down to lower spectrum,
Speaker 1: it goes much further in terms of transmission distance, but
Speaker 1: it doesn't carry as much. So Sprint is upgrading cities
Speaker 1: with this high frequency spectrum. Uh At the end of
Speaker 1: the day, they want to market at as having the
Speaker 1: fastest network in the US, and they may have a
Speaker 1: good shot at that. Concurrent with that network upgrade, they're
Speaker 1: doing a pretty major restructuring at the company. They're trying
Speaker 1: to take two billion in costs out of the operation.
Speaker 1: I have to say that part of the story is
Speaker 1: playing out very well. Um. They're on track to do
Speaker 1: to have all two billion out of the business a
Speaker 1: year from now by the end of next March UM
Speaker 1: and are on track to do that. Uh So it's
Speaker 1: an interesting story and it's a story that continues to
Speaker 1: get better. The one thing I'm worried about, we heard
Speaker 1: this today on the conference call, is that they're building
Speaker 1: out that high frequency spectrum using what are called small cells.
Speaker 1: So they're putting in these mini cell sites along city blocks,
Speaker 1: on rooftops all that, and the it's it's killer trying
Speaker 1: to get these municipal rights away. And so they've had
Speaker 1: delaze there which is pushing out the capital spending, which
Speaker 1: means the the actual upgrade of the network, and those
Speaker 1: plans are getting pushed out a bit to next year,
Speaker 1: which is not to say it's not going on, but
Speaker 1: we're having a push out, which is never good for
Speaker 1: any stock. So, John, you talk about taking two billion
Speaker 1: dollars of costs that I want to hear more about this,
Speaker 1: this very ambitious project, But two billion dollars out of
Speaker 1: a company? How many workers can you lay off? What
Speaker 1: was so redundant? It's just it's it's mind boggling. Well,
Speaker 1: you know, it's hard to believe until you go out
Speaker 1: to visit Sprint in Kansas City. They have a massive
Speaker 1: campus out there, um, and they were once a much
Speaker 1: larger carrier, and so they need to right size this
Speaker 1: organization in line with the current revenue run rate um.
Speaker 1: You know, and I frankly I think they'll do it.
Speaker 1: There's lots of areas where you can take out cost.
Speaker 1: It's very expensive to run a telecom network. As you
Speaker 1: lose subscribers and you get smaller because you're losing share,
Speaker 1: you can, as you alluded to Kathleen, you can reduce personnel.
Speaker 1: Uh in terms of the campus. I know they've been
Speaker 1: leasing parts of the campus to third parties and reducing
Speaker 1: their footprint out there. Um, they don't share a whole
Speaker 1: lot in terms of specifics, in terms of where they're cutting,
Speaker 1: in what they're doing. I do know this. They turned
Speaker 1: to every line manager in Sprint and said, we want
Speaker 1: you to come back to us with a plan on
Speaker 1: how you would cut x per cent of costs. I
Speaker 1: forget what the percent was. So it really is an
Speaker 1: organization wide effort at Sprint. And you know, Uh, the
Speaker 1: CFO was speaking recently, not on the call today, but
Speaker 1: I heard him recently, and he said, we have identified
Speaker 1: every single area where we're going to take costs out,
Speaker 1: so we know where that two billion dollars is coming from.
Speaker 1: It's really just a matter of time to execute on that.
Speaker 1: You can't do it all at once. Hey, John, you
Speaker 1: know you mentioned that two point five giga hurts UH
Speaker 1: spectrum that Spring has, right and right. I don't want
Speaker 1: to get two geeky on all this, but there is
Speaker 1: an auction that is coming up at the end of
Speaker 1: the month and it has to do with low band spectrum, right,
Speaker 1: So just explain to people this low band spectrum, uh,
Speaker 1: maybe easier, right, I mean, it can travel, as you said,
Speaker 1: longer distances, and it also penetrates buildings better than the
Speaker 1: higher band spectrum. And that PIM is a very key point.
Speaker 1: Spectrum has different properties depending on where you are in
Speaker 1: the electromagnetic spectrum. In this case, we're talking about radio waves.
Speaker 1: You know, as we move into a data centric world,
Speaker 1: those higher frequencies are gaining in value because people want
Speaker 1: fast download speeds, but the reality is they also want
Speaker 1: service when they're in building. The early cellular networks were
Speaker 1: built with that low frequency spectrum. It was given to
Speaker 1: mobile carriers. It was also given to broadcasters who were
Speaker 1: broadcasting analog signals. Remember analog TV PIM And so analog
Speaker 1: takes up a much bigger, larger amount of spectrum than digital,
Speaker 1: and so as they move to digital, there's free spectrum there.
Speaker 1: It's going up for grabs and it's a very valuable asset.
Speaker 1: Um T Mobile is the one that needs that low
Speaker 1: band the most. They are going to be most aggressive
Speaker 1: in this auction a T and TM Verizon have the
Speaker 1: most in their portfolio, and Sprint is setting it out
Speaker 1: because they just don't have the money. So all right,
Speaker 1: John Butler thank you so very much. Joining us from
Speaker 1: Bloomberg Intelligence PIMA. We gotta wrap it up here in
Speaker 1: San Francisco, home of Bloomberg nine six Radio, you're listening
Speaker 1: to taking Stock. I'm Pim Fox, my co host Kathleen Hayes,
Speaker 1: and this is Bloomberg Radio. Coming up, Bloomberg Laws. Brought
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