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Sprint's A More Desirable Telecom Acquisition Than Nokia - Saibus Research

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Sprint’s A More Desirable Telecom Acquisition Than Nokia

In our June report comparing Sprint Nextel (S) to Nokia (NOK) we analyzed the progress of those once-great telecom titans in turning around the weak performance that both companies have been enduring since the beginning of 2006. We elaborated on how both companies were once well-respected mobile communications industry pioneers but have seen shocking revenue declines and losses, value-destroying acquisitions and company credit ratings cut to junk during the last seven years. Our thesis underlying the creation of our June report was that Sprint was a better telecom turnaround story and we were able to conclude that our thesis was met and it was reinforced with our September update. Here is why we see Sprint continuing to make more progress than Nokia in its corporate turnaround:

Revenue Trends:

Sprint Nextel: We were ecstatic when Sprint came out with its Q2 2012 results because its year-over-year wireless division revenue grew at a faster rate than Verizon Wireless (VZ) or AT&T Mobility (T). Although its Q3 2012 results were not as impressive, Sprint’s year-to-date wireless division revenue growth rate was 3bp higher than Verizon’s. An even bigger positive takeaway with regards to revenue growth between Sprint Nextel versus the AT&T-Verizon duopoly is that Sprint had grown its YoY wireless revenue at a faster than AT&T Mobility’s YoY revenue growth for 3 straight quarters and its YoY wireless service revenue for the last 5 straight quarters.

We can see our thesis about Sprint improving its competitive position and serving to sap the growth rates of AT&T Mobility, Verizon Wireless and especially T-Mobile USA is continually confirmed on a quarter-by-quarter basis. While Sprint’s Wireline revenue declines are of a greater magnitude than that of AT&T or Verizon, Sprint’s Wireline only accounts for less than 11% of its most recent quarterly revenues, versus 34.2% for Verizon and

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