Global business news twenty four hours a day at Bloomberg dot Com, the Radio, plus Lobola and on your radio. This is a Bloomberg Business Flash from Bloomberg World Headquarters. I'm Katherine Cowdery. Stocks fell, dragging the SMP five hundred two a three week low. Economic concerns resurfaced after China and the UK reported weaker than forecast factory data that sent commodity shares lower, with energy producers falling the most
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stock with Gods and Pim Fox on Bloomberg Radio. Sprint the shares of Sprint while they sprint it higher today by more than five percent. Let's find out why we've got John Butler, senior Telecom's analysts for Bloomberg Intelligence. John always a pleasure. Thanks, I'm great. You know, I would imagine that many investors in Sprint are feeling a little good today, although you know it's been a rough ride
for them. Tell me what's going on in Sprint. They talk about reducing capital spending us on, but what's the business like at Sprint? Yes, Sprints. Sprints a complex story. It's the underdog in the space. It's the fourth largest carrier in the US. They're undergoing two things at once. They're doing a large network nationwide upgrade. I use their greatest asset, which is this high frequency two point five
gigger hurt spectrum. And it's a complex upgrade because high frequencies like that don't travel very far, but they carry lots of data, and as you go down to lower spectrum, it goes much further in terms of transmission distance, but it doesn't carry as much. So Sprint is upgrading cities with this high frequency spectrum. Uh At the end of the day, they want to market at as having the fastest network in the US, and they may have a good shot at that. Concurrent with that network upgrade, they're
doing a pretty major restructuring at the company. They're trying to take two billion in costs out of the operation. I have to say that part of the story is playing out very well. Um. They're on track to do to have all two billion out of the business a year from now by the end of next March UM and are on track to do that. Uh So it's an interesting story and it's a story that continues to
get better. The one thing I'm worried about, we heard this today on the conference call, is that they're building out that high frequency spectrum using what are called small cells. So they're putting in these mini cell sites along city blocks, on rooftops all that, and the it's it's killer trying
to get these municipal rights away. And so they've had delaze there which is pushing out the capital spending, which means the the actual upgrade of the network, and those plans are getting pushed out a bit to next year, which is not to say it's not going on, but we're having a push out, which is never good for any stock. So, John, you talk about taking two billion dollars of costs that I want to hear more about this, this very ambitious project, But two billion dollars out of
a company? How many workers can you lay off? What was so redundant? It's just it's it's mind boggling. Well, you know, it's hard to believe until you go out to visit Sprint in Kansas City. They have a massive campus out there, um, and they were once a much larger carrier, and so they need to right size this organization in line with the current revenue run rate um. You know, and I frankly I think they'll do it. There's lots of areas where you can take out cost.
It's very expensive to run a telecom network. As you lose subscribers and you get smaller because you're losing share, you can, as you alluded to Kathleen, you can reduce personnel. Uh in terms of the campus. I know they've been leasing parts of the campus to third parties and reducing their footprint out there. Um, they don't share a whole lot in terms of specifics, in terms of where they're cutting,
in what they're doing. I do know this. They turned to every line manager in Sprint and said, we want you to come back to us with a plan on how you would cut x per cent of costs. I forget what the percent was. So it really is an
organization wide effort at Sprint. And you know, Uh, the CFO was speaking recently, not on the call today, but I heard him recently, and he said, we have identified every single area where we're going to take costs out, so we know where that two billion dollars is coming from. It's really just a matter of time to execute on that. You can't do it all at once. Hey, John, you know you mentioned that two point five giga hurts UH
spectrum that Spring has, right and right. I don't want to get two geeky on all this, but there is an auction that is coming up at the end of the month and it has to do with low band spectrum, right, So just explain to people this low band spectrum, uh, maybe easier, right, I mean, it can travel, as you said, longer distances, and it also penetrates buildings better than the higher band spectrum. And that PIM is a very key point. Spectrum has different properties depending on where you are in
the electromagnetic spectrum. In this case, we're talking about radio waves. You know, as we move into a data centric world, those higher frequencies are gaining in value because people want fast download speeds, but the reality is they also want service when they're in building. The early cellular networks were built with that low frequency spectrum. It was given to mobile carriers. It was also given to broadcasters who were
broadcasting analog signals. Remember analog TV PIM And so analog takes up a much bigger, larger amount of spectrum than digital, and so as they move to digital, there's free spectrum there. It's going up for grabs and it's a very valuable asset. Um T Mobile is the one that needs that low band the most. They are going to be most aggressive in this auction a T and TM Verizon have the most in their portfolio, and Sprint is setting it out because they just don't have the money. So all right,
John Butler thank you so very much. Joining us from Bloomberg Intelligence PIMA. We gotta wrap it up here in San Francisco, home of Bloomberg nine six Radio, you're listening to taking Stock. I'm Pim Fox, my co host Kathleen Hayes, and this is Bloomberg Radio. Coming up, Bloomberg Laws. Brought you by the Carlisle and newly redesigned Kimpton Hotel in Washington, d C. Make the Carlisle Hotel your new business travel
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