Corporate reorganizations sometimes are signals about future developments. Such moves can signal that assets could be spun off, sold or merged.
In other cases, the moves align “growth” from “cash flow” generating assets. It likely is premature to draw firm conclusions from SoftBank’s decision to separate its Japan assets from international assets.
It is tempting to describe the change as the creation of new units focused on “cash flow” and “growth,” but the reorganization puts the cash-generating but slow growth mobile operator assets into both firms.
The obvious change is that “Japan” assets are separated from international assets. One practical implication is that Sprint will not be “rescued” by cash injected from the profitable Japan operations.
One way or the other, Sprint will have to claw its way out of its debt, market share, growth and profitability issues on its own.
It might be interesting to speculate on present drivers of Sprint market value. Sprint’s 2.5 GHz spectrum could be worth $21 billion, some estimate.
Others estimate AT&T spectrum licenses are worth more than $91 billion. Verizon's spectrum is now valued at $79.4 billion.
Goldman Sachs values Dish's spectrum at around $50 billion. Sprint's spectrum might be worth $70 billion, while T-Mobile US spectrum is valued at around $56 billion.
To put Sprint in perspective, the firm’s market capitalization in early March 2016 was about $15.5 billion.
One might argue in several directions. Either Sprint’s spectrum is significantly overvalued--in which case spectrum licenses owned by the other carriers might also be overvalued--or Sprint’s operating business is undervalued. Or, one might argue both statements are true.
In early March 2016, T-Mobile US had a market capitalization of about $31.5 billion. So T-Mobile US value could arguably be said to lie in the value of its spectrum, as well.
That cannot be said of either AT&T or Verizon, in part because both firms have big revenue streams not derived directly from spectrum assets. AT&T market cap in early March 2016 was in excess of $233 billion.
Verizon’s market cap was about $212 billion.
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