Verizon currently covers 330 markets with its LTE signal and AT&T has 47 LTE markets. T-Mobile will be starting to build its system sometime next year. Sprint has held on the belief that with fewer subscribers than Verizon and AT&T, it will require less spectrum than those two. But the difference is that Sprint does not have the cash that fills the vaults at Verizon and AT&T. In the first quarter of this year, the carrier lost 192,000 subscribers and $863 million. Brokerage house Sanford Bernstein says that shutting down the Nextel network will result in a drop in revenue right at the time that costs for building the LTE network peak.
has $22 billion in debt with a market value of $10 billion. Based on quotes for Sprint's credit default swaps (basically a financial transaction that protects your debt holdings from bankruptcy) from financial information provider Markit, investors are pricing in a 47% chance that Sprint will go bankrupt.
The one thing that would help solve Sprint's problems, an increase in business, may not be in the cards. For years, Sprint said that business would be much better if only it could offer the Apple iPhone to its customers. Last year, Sprint took a $15.5 billion gamble, signing a contract with Apple guaranteeing that amount of sales of the popular smartphone over a four year period. BTIG says that the deal calls for the mobile operator to sell 6.25 million to 7.5 million units of the device each year, or pay a penalty. Sprint's first quarter report shows that it is selling the phone at an annualized rate of 6.2 million units. While Sprint won't comment on the actual amount of Apple iPhone it has contracted to sell each year, it does say that with the addition of units sold through its pre-paid Virgin Mobile subsidiary, it should be able to meet the requirements of the contract with Apple. CEO Dan Hesse earlier said that the carrier won't make money on the contract with Apple until 2015.