Canaccord Genuity Telecommunications Analyst Greg Miller views Sprint’s Q1/12 results as mixed, as the company faces an incrementally challenging operating environment and as its network reconstruction process (Network Vision) is only now getting underway in a meaningful way. With so many variables to predict, many outside of the control of the company, it becomes difficult to have confidence in the long awaited turn.
Miller continues to believe investors should wait for more concrete details regarding Sprint’s network reconstruction process and its prospects for an organic recovery before buying the shares. Although the Q1/12 report provides some hope for investors, with delays to large incremental spending (both Opex and Capex), Miller does not believe the balance of the year will yield similar results.
The Q1/12 results were driven by temporary expense savings. It is important to note that the surprising wireless service margin beat in the quarter was the result of lower than expected Network Vision spending, lower gross additions and lower SG&A expenses (all of which are not likely to be repeated).
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