Sprint again slashes capital expense forecasts with confidence it can do more with less than rivals T-Mobile, Verizon and AT&T.
Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
Sprint has a history of turning the industry on its head, and by that I mean making those in the telecom industry turn their heads nearly upside down in attempting to understand just what exactly is going through the minds of those in charge at Sprint.
https://youtu.be/SMyK2WwaVt0
It’s like once someone is put in a leadership position at Sprint they enter some Bizarro World where up is down, right is wrong and only the craziest ideas make any sense.
https://youtu.be/IcjSDZNbOs0
How else do you explain Nextel, WiMAX and RadioShack?
The latest Sprint head-scratcher was its move this week in slashing its capital expense forecast for its current 2016 fiscal year down to as low as $2 billion, or basically any amount of change it finds in between couch cushions at corporate headquarters.
For some context, the carrier last year caused all sorts of kerfuffling when it announced it expected full-year 2016 capex to come in around $3 billion, which was about 50% less than what the carrier spent the previous year. Sprint argued it had already spent billion of dollars upgrading its network during its Network Vision program and that it was now focused on a lower-cost strategy centered on small cells, arm twisting and recycling spokespeople.
(I gotta say it’s always nice when Sprint’s current management mentions Network Vision in any discussion of what the old regime did wrong, but in turn on how the carrier is in a much better spot because of the program. Long live Network Vision!)
Analysts at the time took the art of the spit-take to new levels on hearing the news, claiming the planned capex was barely enough to keep power running to cell sites let alone help Sprint counter years of falling perception on network quality at the carrier.
Sprint management this week cited improvements in network performance tests as indicative that it’s model of spending less to do more has been a success. And in fact Sprint does seem to have improved in some network performance metrics, though to claim “success” is probably a bit more spin than reality.
With that, Sprint figured if it has done so well with plans to cut 50% from its capex budget that it might as well cut another billion dollars and really ramp up the improvement. It just makes sense.
Some might argue that in some industries a company can truly do more with less, but my guess is that those industries typically involve gnomes and underpants.
All of this comes at the same time rivals Verizon Communications, AT&T and T-Mobile US are at least maintaining wireless capex as they look to bolster their network operations in order to stay ahead of growing consumer demand and lay the groundwork for “5G” network plans. And those capex levels are two- to three-times the level than what Sprint has in mind.
Not to say that all those big brains over at Verizon, AT&T and T-Mobile US are doing everything wrong. But, obviously Sprint is saying that and in this day and age of alternate facts who are we to argue.
And, I can only assume the next step for Sprint would be to take this less with more idea to the next level by again slashing more from its capex budget. Why waste $2 billion on a network when you can precisely spend $1.5 billion. Or really slay rivals by knocking network spend down to just nine figures. You gotta have a goal.
So, well done Sprint in again turning the mobile telecom world on its head by managing to find a way to do more with less. And as years of history has shown, this is obviously a plan that can’t fail.
Thanks for checking out this week’s column. Here’s a quick extra to get you through the weekend:
–Well, it’s that time of the year again folks. Cisco is set to release its annual “Visual Networking Index: Global Mobile Data Traffic Forecast Update,” which in addition to being a mouthful, will be the basis for at least one PowerPoint slide per presentation that you view over the next 12 months.
For those not subjected to such presentations, every – and I mean “every” – presentation is required by telecom law to include at least one piece of numbers-based information from the annual Cisco VNI report. Brownie points are awarded to those numbers presented in some sort of illegible graph that the chart maker found to look good when viewed from about 1 foot away on their laptop, but is unreadable from any distance greater than 1 foot.
To me, one of the best things about the Cisco VNI is that while it forecasts numbers out over a five year period, the fact the company releases a new one every year basically allows it to spike that hockey stick curve to the moon for the four furthest years that it can just readjust in 12 months. It’s really quite brilliant.
While the report is not scheduled to be released until Feb. 7, Cisco provided a tease as to what we can expect, including an exact 10% increase in the total amount of mobile data traffic handled by “4G” networks between 2016 and 2021; that mobile video will account for 78% of all mobile data traffic by 2021; and that there will be 542 million Wi-Fi hot spots in 2021.
Aren’t numbers fun?
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