Sprint Corp (NYSE:S) has started making efforts to improve its shareholder value, by initiating a share buyback program worth $4.4 billion. This is going to be the biggest share buyback initiated by the company. The announcement came from Soft Bank Group, Japan, after investors voiced concerns about the company’s US based telecommunications group, Sprint Corp.
As per analyst reports, the share buyback program would restore a total of 14.2% of the company’s shares. The move is expected to produce a surge in the stock price of Sprint Corp. The company had been bought by Soft Bank Group of Japan, in 2013. However, investors of Soft Bank saw this as a bad move and consequently the share price of the stock suffered. It is important to note here that nothing drastic had happened in Sprint Corp, since its acquisition, but the investors had remained pessimistic about the company.
The majority of the negative opinion had come from the credit position of Sprint. Additionally, it was the very same high yield debt problems that had kept the company from becoming one of the elite telecommunication companies. Currently, Sprint has $2 billion worth of high yield bonds that are due by December 2016 alone. Analyst reports suggest that the company has a total debt of $34 billion. The CEO of Sprint, Marcelo Claure, remains optimistic that the company is capable of changing the situation through cost cuts and leasebacks. Added to this, the company is also trying to gain a larger share of the market, by offering its services at reduced prices. With a service quality that is comparable to Verizon and AT&T, Sprint could very well succeed in its plans.
The best part about the share buyback program, however, is that Soft Bank is going to fund the program by selling some of its assets in Tokyo. A recent disclosure by the company indicated that it had a total of $66.2 billion worth of listed securities at hand.
Sprint Corp (NYSE:S) closed at a share price of $2.66, after adding 4.31% to its share value, during the February 12 session.