Sprint Delays Mobile Unit IPO
Giving the initial public offering market another black mark, Sprint announced Wednesday it is delaying an expected offering for its PCS Group digital mobile phone unit.
The Kansas City phone company (FON) cited "current general market conditions" for the decision. The delay follows similar postponements of IPOs from online retailers NetGrocer and Internet America on Tuesday.
Sprint does plan to proceed with the recapitalization of its stock, which will turn each existing share of Sprint stock into one share of a newly created class of Sprint and 1/2 share of tracking stock in the PCS Group unit. Sprint PCS' cable and telephone partners (Deutsche Telekom, France Telecom, TCI, Comcast and Cox) would receive special classes of shares in both stocks.PCS Group offers mobile phone users a wireless network for digital personal communications services in the United States that utilizes a single frequency band and a single technology based on the CDMA standard. It operates in 161 metropolitan markets within the United States, including 38 of the 50 largest metropolitan areas, with plans to enter the other 12 markets by the end of the first half of 1999, according to the prospectus.
In the six months ended June 30, the company recorded a pro forma operating loss of $933.2 million and a net loss of nearly $1.1 billion on sales of $468.0 million.
Those huge losses were the major reason why the deal couldn't fly at this time, said John Fitzgibbon, editor of The IPO Reporter. "You have to have a bottom line," he said. "Look at all the deals that have been delayed. They were bleeding red ink."
The company said it will hold a special shareholders meeting on Nov. 13 to vote on the restructuring and recapitalization of Sprint PCS, as well as the issuance of new stock. If approved, the recapitalization will occur 10 days after the meeting.
Written By Darren Chervitz