Sprint (NYSE:S) has been pretty busy in November, announcing the demise of its attempt to merge with fellow wireless provider T-Mobile and the initiation of a multi-year strategic agreement with Altice USA (NYSE:ATUS).
Under the terms, Altice will be able to use Sprint's network, under an MVNO (mobile virtual network operator) model, to provide mobile voice and data services. In return, Sprint will densify its network using the Altice broadband network.
In a conference call last week, Tarek Robbiati, CFO of Sprint, called the deal "unique" in terms of an MVNO arrangement.
"It is not a simple resale of capacity," Robbiati said. "There is from the Altice standpoint, but the infrastructure swap is what makes the deal the first of its kind."
Sprint plans to deploy several thousand small cells in the Altice footprint in order to densify its network to bolster the future of 5G. Robbiati noted that the deal is part of Sprint's overall strategy and referred to a joint venture parent company SoftBank announced in October with Australian-based Lendlease Group. Each company has committed $200 million in equity to acquire and restructure 8,000 existing telecom sites, including rooftops, across the United States.
Under the terms of its agreement with Sprint, Altice can only sell wireless within its footprint. However, as it expands this footprint, it has the right to sell wireless in the new areas. Likewise, Sprint may piggyback on expansion of the Altice infrastructure. Robbiati said he is "comfortable" with the investment of tower companies and partnerships with the likes of Altice.
"I think we have a compelling proposition in the near term," Robbiati said, noting that Sprint's priority is to begin upgrading its existing footprint in terms of towers and also in parallel to densify.
Robbiati said the agreement with Altice was not contingent on the failure of the T-Mobile deal.
"(Altice) would have taken place anyway," he said. "(Densification) is a critical part of our strategy. We started with trials with Altice six months ago. We spoke about the trials in prior earnings announcements."
The Sprint/Altice deal is not exclusive, meaning that Spring is free to make similar agreements with other players as well. The mobile operator also is free to deploy fixed wireless offerings; there aren't any restrictions in the terms.
There is monetary compensation involved on top of the infrastructure sharing, but Robbiati wouldn't share specifics with regards to the volume rate card for gigabytes or voice minutes. He also wouldn't provide detail about the performance measurements saying only that Sprint feels "good" about the fact that Sprint's performance hurdles are the right ones.
"We intend as true partners that we deliver those," Robbiati said.