Sprint Corp. is preparing to mortgage a little more than 10% of its wireless airwaves to raise needed cash to fund its business, according to several people familiar with the matter.
This would be the third time Sprint has used its assets as collateral to borrow money, a creative, if unusual, move in the wireless industry.
Sprint believes the chunk of airwaves is worth more than $14 billion, though it does not plan to borrow the full amount initially, the people said. Instead, it will likely aim at first to raise about $3.5 billion, the people said, and the bonds are expected to be rated investment grade. The company, which is controlled by Japan’s SoftBank Group, could announce details of the plan as early as this week, the people said.
It follows the same sale-leaseback model as earlier transactions. In November 2015, Sprint raised $1.2 billion by selling and leasing back handsets, and in April, the carrier used network assets as collateral to raise $2.2 billion. SoftBank provided financing as part of both of those transactions.
Sprint has been losing money for several years, and has nearly $37 billion of total debt, roughly $4 billion of which is due to be paid back by next March. Sprint had $11 billion in liquidity at the end of last quarter.