SoftBank is creating a subsidiary to lend money to its loss-making US operator Sprint with the loans secured against its spectrum holdings, said Bloomberg.
The US operator is $34 billion in debt but CFO Tarek Robbiati said it will accept loans from a new SoftBank unit, with wireless equipment and some of its spectrum as collateral. Sprint will in turn use the loans to repay some of its debt mountain.
Sprint said it will not give up its valuable spectrum but it is hoping to raise $3 billion to $5 billion in loans from the new unit.
However, using spectrum as collateral is an unusual move, suggesting that Sprint is running short of other options in an unfavourable market for high-yield bonds.
In a similar vein, Sprint established a handset leasing company with SoftBank and others in November last year. The new company paid Sprint $1.2 billion for a chunk of the operator’s phone inventory.
Sprint has looked at other radical measures to improve its balance sheet, including a plan to relocate network towers from private companies to government land.
In addition, it has established the more conventional goal of cutting opex by $2 billion in fiscal 2016, which will involve job cuts.