Sprint Mortgages 2 GHz Spectrum for $3.5 Billion

Licenses valued at $16.4 billion
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OVERLAND PARK, KAN.—Wireless provider Sprint is using spectrum valued at $16.4 billion for collateral for a $3.5 billion loan.

Sprint Corp. said that three of its “wholly owned, special-purpose subsidiaries have commenced an offer of up to $3.5 billion of wireless spectrum-backed notes in three series, with varying maturities, in a private transaction that is exempt from the registration requirements of the Securities Act of 1933.”

The Sprint subsidiaries will take over a portfolio of FCC licenses and third-party leased license agreements comprising “a portion of Sprint’s 2.5 GHz and 1.9 GHz spectrum holdings, representing approximately 14 percent of Sprint’s total spectrum holdings on a MHz-pops basis.”

Sprint said its spectrum is currently used by 77 percent of its 2.5 GHz-enabled sites and approximately 33 percent of Sprint’s 1.9 GHz enabled sites. The airwaves will be leased back to Sprint pursuant to a long-term lease agreement, with rent payments servicing the $3.5 billion infusion.

Sprint said that based on an independent third-party valuation, its spectrum portfolio would be valued at $16.4 billion as of June 30, 2017.

The $3.5 billion notes are being issued pursuant to a $7 billion program consisting of this and potentially future issuances, subject to certain conditions. The notes are expected to be rated investment grade by both Moody’s and Fitch. Should all conditions remain stable, the deal is expected to close in November.

See this Reuters report for more.