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Sprint Gains on Renewed Talks With T-Mobile & iPhone Offer


Per Reuters, Sprint Corporation S has resumed talks to merge with T-Mobile US, Inc. TMUS, marking the latest effort to bring the United States’ fourth and third largest wireless carriers together. Their previous round of negotiations ended in November 2017, over valuation disagreements.

Upon successful completion of the deal, the combined company would have more than 127 million customers and could create more formidable competition for Verizon Communications Inc. VZ and AT&T Inc. T, being the number one and number two players in the wireless industry respectively, amid a race to expand 5G offerings.

Sprint is struggling with a long-term debt of more than $32 billion. The company’s majority owner, SoftBank Group Corp, a Japanese conglomerate holding company, is looking to trim the debt, which reached $147 billion as at the end of December 2017. It is also planning to raise cash by taking its Japanese mobile phone unit public this year. Sprint and T-Mobile decided to resume talks partly because they want to share the financial burden of investing in their networks. The negotiations are, however, at an early stage.

In a separate development, Sprint announced that it will offer iPhone 8 and iPhone 8 Plus RED Special Edition. The new iPhones, which come with a stunning red finish, has a beautiful red colored glass enclosure with a matching aluminum band and a sleek black front. Both phones belong to a new generation of iPhone with glass and aluminum design made of the most durable glass ever in a smartphone.

The HD Retina display and A11 Bionic chip have been designed for an immersive augmented reality experience. The iPhone 8 Plus has dual 12-megapixel cameras and introduces Portrait mode with Portrait Lighting, bringing dramatic studio lighting effects. Such features allow customers to capture stunning portraits with a shallow depth of field effect in five different lighting styles.

Sprint has come up with a limited time offer for the new and existing customers to lease an iPhone 8 or iPhone 8 Plus and get an iPhone 8 64GB lease on the company.

Moving ahead, Sprint is making a major multi-year investment to dramatically improve its network coverage, reliability and speed for customers. It is preparing for the launch of its 5G mobile network in the United States in the first half of 2019. The company's Next-Gen Network build includes upgrading virtually all cell sites to triband service using 800MHz, 1.9GHz and 2.5GHz.

Thousands of new cell sites are likely to expand coverage while more small cells will densify the network. Game changer Massive MIMO technology, a bridge to 5G (the next generation of wireless technology), can increase the current LTE systems capacity up to 10 times for faster data speeds to more customers.

With such happenings underway, Sprint’s share price witnessed an increase of 17.1% and eventually closed at $6.02 on Apr 10 giving the company a market capitalization of $24.1 billion.

Over the last three months, the stock has outperformed the industry with an average return of 5.8% against 3.2% decline for the latter.

Sprint carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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