Sprint has made “dramatic improvements in its financial strength and flexibility” during 2003, said Robert J. Dellinger – Executive Vice President & CFO at Sprint, speaking at the UBS conference in New York. Sprint is using its free cash flow to pay off its debt, which is down by $3.9 billion so far this year. Short term loans have been paid off and the company’s credit rating has improved.
Dellinger shared an optimistic view of 2004, noting that operations at the company’s FON and PCS divisions are improving and that both groups will be introducing new services. Sprint PCS just launched its “push-to-talk” service. Dellinger conceded that growth opportunities outside of wireless “are more constrained” but that Sprint’s FON group continues to see gains in UNE-p lines. He believes the long decline in enterprise long distance voice may be bottoming out. Wireless substitution continues as a major trend affecting the wireline long distance business, but Sprint PCS benefits from the trend.
Dellinger also said that recent FCC decisions — or lack thereof — have created significant regulatory uncertainty. Given its mix of local, CLEC and wireless network assets, Sprint is pushing for “regulatory clarity.”
Going forward, Sprint’s capital spending programs will focus on providing a more “competitive cost structure.” The company has undertaken 41 separate projects aimed at eliminating $1 billion in annual operating costs. The initiatives include a streamlining of the company’s management and an outsourcing of certain IT operations.
Regarding MCI’s imminent emergence from Chapter 11, Dellinger noted that Sprint will have less debt than the new MCI. He also said Sprint’s EBITDA margins are higher, putting Sprint in a better competitive position.
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