Sprint To Slash Capital Spending

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shearsThe carrier intends to lop off as much $1.7 billion in network equipment and other capital goods in fiscal year 2016. Sprint invested $4.7 billion in the 2015 fiscal year and $5.4 billion in 2014, according to RCRWireless.

Sprint delivered the news earlier this week when it announced its quarterly financial results with a focus on cost reductions in the coming months and quarters. In its outlook, Sprint management said it expected to see a $2 billion savings from handset lease restructuring and pick up a 40 percent reduction in its capex budget. The strategy got a lukewarm response by some on Wall Street.

“Sprint has made considerable progress in executing its cost reduction initiatives and addressing near-term liquidity issues,” wrote Barclays Amir Rozwadowski in a note to investors. “However a material reduction in its capex is likely to keep questions on the longer-term success of its ’doing more for less’ strategy in place for the foreseeable future. We retain an Equal Weight rating.”

Evercore ISI analyst Jonathan Schildkraut said he thinks “the reduction in expected capex could make further network improvements more difficult.” He told investors with shares of Sprint to “Maintain HOLD” and reiterated a $3.50 price target on the issue.

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