sprint corp: 2q14 review: churn and pricing risks cloud ...€¦ · sprint corp 2q14 review: churn...

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MORGAN STANLEY & CO. LLC

Simon Flannery+1 212 761-6432

Daniel Rodriguez+1 212 761-6648

July 31, 2014

Sprint CorpSprint Corp

2Q14 Review: Churn and PricingRisks Cloud OutlookAs expected, weak business trends continued into2Q14. While Sprint expects to return to postpaidsubscriber growth in 4Q14, there are many movingparts that create uncertainty around the likelihood ofsuch a turnaround. Nonetheless, Sprint continues tofind support from potential M&A.

Monitoring churn and pricing changes. Sprint's stock was down 3%yesterday, likely on the significant 2Q postpaid phone sub losses coupled witha lack of clarity into a material turnaround in business trends. Sprint expects toreturn to positive postpaid net adds in 4Q14 driven primarily by churnimprovements. Until then, investors may have to stomach another quarter ofpostpaid churn headwinds, as the company expects churn to increasesequentially in 3Q14. However, the upward pressure may be less than thehistorical avg. due to better network performance. It is also possible that therebound in postpaid net adds in 4Q could be driven by aggressive pricingactions, which the company is currently trialing in various markets.

Guidance is subject to change. In our view, the commentary aroundpotential pricing changes heading into the holiday season is an importantimplication for the wireless industry. Until now, T-Mobile has been driving themajority of the market disruption, causing others to respond. If we fast forwardto an environment that includes both T-Mobile and Sprint competingaggressively, this increases the risk around wireless price wars. On theearnings call, Sprint stated that “while this adjusted EBITDA guidance doesn'tassume a change in our postpaid rate card for this year, any proposedchanges would be made only after evaluating our market test results anddetermining that they should be long-term accretive for the business.”

Patiently waiting on M&A. Sprint did not provide commentary on apotential deal with T-Mobile, which various media sources (CNN / Reuters)have reported may be announced in September. We acknowledge that apotential Sprint / T-Mobile merger could offer dramatic synergy opportunities(annual cost synergies of some $3bn+), but we continue to believe there aresignificant obstacles around completing such a deal, particularly on theregulatory front (click here for our note on a potential Sprint / T-Mobileclick here for our note on a potential Sprint / T-Mobiledeadeal). T-Mobile has continued to act aggressively in the marketplace, andSprint is evaluating potential pricing changes in coming months, which couldcomplicate the regulatory approval process as the companies would be seenas key drivers behind rising wireless competition.

What’s Next: T-Mo reports 2Q results today. Sprint plans to hold a mediaevent on August 19.

Morgan Stanley does and seeks to do business withcompanies covered in Morgan Stanley Research. As a result,investors should be aware that the firm may have a conflictof interest that could affect the objectivity of MorganStanley Research. Investors should consider MorganStanley Research as only a single factor in making theirinvestment decision.For analyst certification and other important disclosures,For analyst certification and other important disclosures,refer to the Disclosure Section, located at the end of thisrefer to the Disclosure Section, located at the end of thisreport.report.

| July 31, 2014Sprint Corp

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Bull $112015E EV / EBITDA(Standalone)8.5x

Pristine execution drives a solid recovery and / or M&Acreates value: Sprint realizes significant revenue and opexsynergies from the Softbank / CLWR deals. Capex remainselevated, though the investment pays off helping drive subscriberand ARPU growth, and in turn, EBITDA margins increasesubstantially. Sprint is perceived to have strategic value in anindustry that has seen much consolidation.

Base $52015E EV / EBITDA:6.5x

Margin rebound, but below bullish expectations: The balancesheet remains challenged with leverage north of 4.0x long-term.Network performance is a near-term issue keeping capex elevated,while Sprint invests substantially to build out Clearwire’s TDD-LTEand 2.5 GHz spectrum. Accordingly, free cash flow is pressureddespite a solid EBITDA rebound, while ARPU and subscriberheadwinds persist.

Bear $32015E EV / EBITDA 5.5x

Competition and network issues take a toll on growth: Postpaidchurn remains problematic. Revenues fall at a fast clip as postpaidARPU and subscriber growth see substantial headwinds, whileSprint becomes aggressive on pricing in an attempt to take share.Network Vision savings are lighter than expected keeping EBITDAgrowth in check, while capex remains elevated driving substantialFCF pressure.

Investment ThesisInvestment Thesis

Wireless industry growth is slowing, withpenetration at +100%. New subscribers to theindustry are generally of lower value.

Sprint’s competitive position is challenged. Weexpect strong competition from industry peerswho have eclipsed Sprint’s footprint with 4G / LTEto pressure growth.

Sprint plans to spend billions of dollars over thenext several years upgrading its network andacquiring subs. In our view, these projects andreinvestments carry high execution and FCF risks.

Top line growth should slow given saturation ofthe (1) service plans with the $10 price increasefrom Feb. 2011 and (2) postpaid smartphonesubscriber base. We also expect margin pressurefrom subscriber acquisitions and near-termpressure from the Network Vision project, thoughadj. EBITDA should find support from Vision costsavings.

Key Value DriversKey Value Drivers

ARPU support and postpaid and prepaid sharegains

A well executed 4G / LTE build

Network Vision drives substantial 3G / 4G roamingcost savings

M&A and / or spectrum acquisitions

Potential CatalystsPotential Catalysts

Network Vision opex savings are better / worsethan expected

4G / LTE market launches

Network sharing deal

Significant synergies from the Softbank / Clearwiredeals

Spectrum purchases and / or M&A

Softbank repurchases shares until reaching 85%ownership vs. ~80% today

Potential RisksPotential Risks

Network Vision execution risks

Network quality is an issue driving Sprint toremove its unlimited data offering

Cash uses: $15.5bn Apple purchase commitment,spectrum costs, and large net debt balance andFCF burn

Risk-Reward Snapshot: Sprint Nextel (S, $7.76, UW, PT $5.00)Risk-Reward Snapshot: Sprint Nextel (S, $7.76, UW, PT $5.00)

Risk-Reward View: Secular Challenges Remain

Sou rce: Compan y data , Th omson Reu ters, Morgan Stan ley Research

Exhibit 1:Exhibit 1:

Sprint Trading Metrics Relative to Other Wireless Carriers

Sou rce: Compan y data , Morgan Stan ley Research . (1) FCF = EB ITDA - capex - n et in terest expen se - w o rk in g cap ita lch an ges


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Dilution from Clearwire

Industry price war

Key Investment DebatesKey Investment Debates

Debate 1: Can Sprint take Share from Big 4 Peers?Debate 1: Can Sprint take Share from Big 4 Peers?

Market View: Potentially. Although there is downside risk from a price war, a turnaround in subscribergrowth is likely. Softbank could implement an innovative strategy to take share from the US Bells (Verizon andAT&T) and T-Mobile (fourth national player).

Our View: Tough battle ahead. Softbank (covered by Tetsuro Tsusaka in Japan) has acknowledged thechallenge in reversing postpaid subscriber losses given the current US wireless industry structure, whichremains segmented with the larger two national players (Verizon and AT&T) dominant in terms of subscribershare and profitability. Meanwhile, T-Mobile has emerged as an aggressive and disruptive fourth nationalplayer, returning to postpaid subscriber growth in recent quarters. This has left Sprint in a tough position, andaccordingly, we expect competitive and churn headwinds to persist in the near-term until Sprint can deliverbetter network performance with its CDMA and 4G / LTE network upgrades. The Sprint Spark (tri-band networkusing 2500/1900/800 MHz) and Network Vision projects should be able to provide customers with competitivenetwork speeds and quality. However, we expect it will take time to reap the full benefits of Spark, as Sprintplans to cover only 100M POPs by year-end 2014. Strategically, we believe a potential Sprint turnaround ispredicated on the innovative strategies that Softbank and Sprint management implement in the U.S. Softbankhas highlighted network performance, devices, sales and branding, and services / content as the four key pillarsthat will allow it to compete more effectively. Softbank's turnaround of Vodafone Japan has been impressive,and there are lessons that Sprint can learn from the Japanese experience, as well as Softbank's extensiveinternet expertise. Nevertheless, a maturing US wireless industry and rising competition may make itchallenging for Softbank to engineer a similar performance in the U.S. as to when it entered Japan.

2Q impact on our views: Although Sprint platform postpaid subscriber losses of 181k were better than MSeand consensus, postpaid phone net adds / other were -646k / -70k; low ARPU postpaid tablet net adds were535k in 2Q14. The postpaid phone headwinds were driven primarily by churn pressure, which continues to beelevated due to network performance issues. Although the company expects voluntary churn improvements in2H14, churn is expected increase Q/Q in 3Q14 due to seasonal headwinds, while we had previously anticipateda sequential decrease in Sprint platform postpaid churn of 15 bps. That said, the company expects to reachpositive postpaid net adds in 4Q14, which could be achievable if Sprint decides to launch new aggressive pricingplans; the company is currently testing various pricing options in certain markets.

Where we could be wrong: 1) Sprint takes substantial sub share; 2) Sprint is able to deploy the 2.5 GHzspectrum and TDD-LTE faster than initially expected. 3) Peers' face network / customer satisfaction issuesdriving churn higher.

Debate 2: How is the Balance Sheet Positioned?Debate 2: How is the Balance Sheet Positioned?

Market View: There is downside support and upside potential from: 1 ) Softbank's strategic investment(owns ~80% of Sprint shares); 2) a ramp in adj. EBITDA from Network Vision cost savings; 3) synergies from theSoftbank deal; 4) network improvements that should drive postpaid subscriber growth longer-term.

Our View: Challenged. Though cost savings from Network Vision could help profitability, we expect free cashflow headwinds from: 1) continued weak top line growth, 2) uncertain synergy realization from the Softbank /Clearwire deals, 3) substantial capex to upgrade Sprint's CDMA network and transition to 4G / LTE, 4) near-termworking capital requirements related to the shift to installment plans, and 5) the company's high level of


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indebtedness. Although we expect adj. EBITDA to grow substantially over the next few years, a service plan pricewar is a key risk to underlying trends. We believe there could be variability in consensus opex projections givenuncertainty around Softbank / Clearwire synergies and Network Vision savings. Softbank and Sprint seem keenon accelerating the network build with the hope of turning around business trends. In the past, Sprint hashighlighted that $6B of capex reflects a maintenance level with an implied 15% capex intensity. Accordingly,network reinvestment is a key risk, while we believe there could be further balance sheet headwinds fromspectrum acquisitions.

2Q impact on our views: Although free cash flow (FCF) was better than our expectations, the company sawFCF burn of $567M despite having lower capex vs. the prior year quarter and higher EBITDA, as a greaterworking capital requirement from installment plans partly weighed on FCF. We believe the company will rampcapex throughout the year as it continues to densify the 4G / LTE network and deploy the tri-band band 'Spark'network. Sprint lowered it capex guidance from $8.0B to less than $7.0B (MSe: $8.0B) on better pricing, whichshould help FCF trends, while there is also some downside support from improving adj. EBITDA trends as costefficiencies kick-in. Sprint reiterated its adj. EBITDA guidance of $6.7-6.9B. However, the guidance is subject tochange if plan prices are changed later this year heading into the holiday season. Sprint is currently testingvarious pricing options and may make changes later in the year in order to respond to the flurry of recentpricing and promotional activity from competitors. We will be monitoring Sprint's accounts receivable, whichshould trend higher on installment plans. Bad debt expense increased 127% Y/Y to $225M in 2Q14 primarilydue to the new Easy Pay / Framily installment plans, which saw a take rate of ~28% (flat Q/Q). Bad debt writeoffs per account are increasing with more devices.

Where we could be wrong: 1) Sprint could drive substantial share gains and top line growth; 2) Greater thanexpected cost savings and synergies are realized.

Debate 3: Will Sprint do Another Deal?Debate 3: Will Sprint do Another Deal?

Market View: A deal announcement is imminent, although deal consummation is a wild card. In earlyJune, Bloomberg and the WSJ reported that Sprint and T-Mobile were exploring a merger deal (neithercompany has commented) that would value T-Mobile at around $40 per share for 50% cash and 50% equity.CNN and Reuters have recently highlighted that a deal could be announced in mid-September. The financial andoperational benefits of acquiring T-Mobile are substantial. Separately, further spectrum acquisitions are anotherarea of interest.

Our View: Challenged. A Sprint / T-Mobile merger could offer dramatic synergy opportunities. We see annualcost synergies of some $3bn+ per year from streamlining network, distribution, branding amongst otherfactors. Merger integration is never easy, but we believe this would be an easier integration than Sprint/Nexteldespite differing underlying 3G technologies. A successful deal could offer material upside for Sprint and T-Mobile shareholders in our view, while it could have dramatic implications for the industry overall with mostwireless carriers potentially benefitting. Equipment providers, those with spectrum holdings, and towercompanies could face some challenges, although the towers would find support from leases that are between 7-8 years and continued traffic growth. At the same time, there are significant downside risks around a potentialSprint / T-Mobile merger. We believe the FCC and DoJ have demonstrated their concerns over further industryconsolidation amongst the major players, through prior decisions and actions ahead of upcoming spectrumauctions. Traditional HHI measures also suggest significant retail market concentration. While T-Mobile's strongmomentum and Sprint's commitment to the Spark network rollout and testing of new pricing plans suggest thatcompetition among all players is robust, the deal review process could distract the companies from theirmanagement, network planning, spectrum strategy and other initiatives. Refer to our Sprint / T-Mobile deepdive note around a potential merger titled, “Sprint / T-Mobile: What to Expect for Wireless 'Framily,'” publishedon July 9, 2014 (click here for the reportclick here for the report).

In the meantime, there are also upcoming spectrum auctions - AWS-3 (November 13, 2014) and broadcastincentive auction (mid-2015). On a standalone basis, we believe Sprint and T-Mobile's participation in the AWSauction could be limited, as the companies would focus much of their financial resources for the low-band


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https://ny.matrix.ms.com/eqr/article/webapp/02e35038-06ff-11e4-a557-265f51da9937?ch=rpint

broadcast auction, which would be strategically more beneficial to both companies. Interestingly, a WSJ articlerecently highlighted that Sprint and T-Mobile were exploring a potential JV to raise ~$10B in debt in order toparticipate in the upcoming broadcast incentive auction. A JV could have implications on a potential mergerannouncement, the FCC's final rules for the auction, and total auction proceeds (neither company hascommented).

2Q impact on our views: Management did not comment on potential M&A or spectrum auctions.

Where we could be wrong: 1) The regulatory environment becomes less uncertain; 2) Spectrum is no longera strategic focus; 3) Balance sheet pressures prevent Sprint from participating in M&A.


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Key ChartsKey Charts

Financial ChartsFinancial Charts


Sprint Platform Postpaid ARPU Decline of -3.3% Y/Y, Prepaid and Postpaid Sub Losses, and aGreater Mix of Installment Plans Drive a 3.7% Y/Y Decline in Service Revenues

Sou rce: Compan y data , Morgan Stan ley Research Note: MS ca lcu lation fo r to ta l postpaid ARPU ; p ro -fo rma fo r So ftban k an d Clearw ire from 3Q 13on w ards


Consolidated Adj. EBITDA Margin Increases 475 bps Y/Y to 20.8% in 2Q14 on a Strong WirelessMargin Increase of 771 bps to 25.3%

Sou rce: Compan y data , Morgan Stan ley Research Note: Pro -fo rma fo r So ftban k an d Clearw ire from 3Q 13 on w ards


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Cost of Service as a % of Service Revenues Falls to 29% in 2Q14, Down from 31% in 1Q14 and2Q13

Sou rce: Compan y data , Morgan Stan ley Research Note: Pro -fo rma fo r So ftban k an d Clearw ire from 3Q 13 on w ards


Bad Debt Expense Increases Substantially Y/Y Primarily on Installment Plans

Sou rce: Compan y data , Morgan Stan ley Research


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Operating ChartsOperating Charts


Sprint Posts a 7th Straight Quarter of Free Cash Flow Burn in 2Q14 of $608M

Sou rce: Compan y Data , Morgan Stan ley Research *FCF = O CF less capex an d expen d itu res fo r spectru m licen ses Note: Pro -fo rma fo r So ftban k an dClearw ire from 3Q 13 on w ards


Total Postpaid Subscriber Losses of 245k in 2Q14 (181k Sprint Platform Sub Losses) Persist for a10th Straight Qtr. Despite 535k Postpaid Tablet Net Adds

Sou rce: Compan y Data , Morgan Stan ley Research


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Improvement in Postpaid Net Adds (Y/Y Change) Slows in 2Q14



Sprint Platform Postpaid Churn Increases 22 bps Y/Y to 2.05%, Reflecting the Highest PostpaidChurn Level Among the Big 4 Carriers



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Postpaid Gross Adds Increase for a Third Straight Quarter by 19% Y/Y Partially Helped by TabletMomentum



Sprint Market Share of Big 4 Postpaid Gross Adds Likely Improved Modestly Y/Y from 15.0% in2Q13 to 15.8% in 2Q14

Sou rce: Compan y Data , Morgan Stan ley Research Note: T-Mob ile is a MSe fo r 2Q 14


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Lifeline / Assurance Churn Drives Sprint Platform Prepaid Subscriber Losses of 542k in 2Q14

Sou rce:Compan y Data , Morgan Stan ley Research


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Key MS Estimates ChangesKey MS Estimates Changes


MS Estimate Changes (2014E-2016E)

Sou rce: Compan y Data , Morgan Stan ley Research E= Morgan Stan ley Research Estimate


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2Q14 Highlights – What We Liked / What We Did Not Like2Q14 Highlights – What We Liked / What We Did Not Like

What We Liked

LTE / Network: Sprint now covers 254M POPs with 4G / LTE, meeting the company's target of 250MPOPs by mid-year. Looking ahead, Sprint accelerated that rollout of 3x carrier aggregation to 1H15 (2H15prior). On Spark, Sprint continues to plan to cover 100M POPs with the tri-band network by year-end. Thecompany highlighted that 8T8R field testing was complete and the deployment is ramping.

Capex: Sprint now expects capex to be below $7.0B in 2014 vs. the prior guidance of $8.0B. Capital spendwas substantially below MS and consensus expectations in 2Q14. The company highlighted that it expects


2Q14 Actual Results vs. Expectations and What We Liked / What We Did Not Like

Sou rce: Compan y Data , Morgan Stan ley Research E= Morgan Stan ley Research Estimate


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to increase spend in 2H14.

Guidance: Sprint reiterated adj. EBITDA guidance of $6.7-6.9B, although this is subject to change as theguidance does not assume any postpaid rate plan changes. The company highlighted that it is “closelyevaluating the competitive landscape and our positioning in light of our goal to be postpaid net addspositive in the fourth quarter.”

What We Did Not Like

Postpaid subscriber losses: Although Sprint platform postpaid subscriber losses of 181k were betterthan MSe and consensus, postpaid phone net adds / other were -646k / -70k; low ARPU postpaid tabletnet adds were 535k in 2Q14. That said, the company expects to reach positive postpaid net adds in 4Q14.

Postpaid churn: Sprint management highlighted that postpaid churn continues to be elevated due tonetwork performance issues. The company expects voluntary churn improvements in 2H14 but forvoluntary churn to increase Q/Q in 3Q14 due to seasonal headwinds. Sprint stated, “Over the last five plusyears we have experienced an average seasonal churn increase of approximately 20 basis points from thesecond to the third quarter. Our sequentially reducing voluntary churn, we now expect to mitigate half ofthat normal seasonal increase as we look to the third quarter.

Prepaid subscriber losses: Sprint platform lost 542k subscribers due to Lifeline / Assurance relatedchurn.

Potential price cuts: Sprint is currently testing various pricing options and may make changes later in theyear in order to respond to the flurry of recent pricing and promotional activity from competitors.

Bad debt expense: Bad debt expense increased 127% Y/Y to $225M in 2Q14.


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Earnings ImpressionEarnings Impression


MS Earnings Impression of Sprint 2Q14 Earnings

Sou rce: Morgan Stan ley Research


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Sprint Financial Statements and Performance StatisticsSprint Financial Statements and Performance Statistics

Valuation Methodology

We derive our 12-month forward price target of $5 from a target enterprise value-to-EBITDA multiple of 6.5x onour 2015E Adj. EBITDA estimate of $7.67B. We consider these assumptions reasonable relative to the 2015Ewireless comparable average of 6.7x and believe our valuation methodology is balanced in light of ourexpectations that Sprint will see substantial free cash flow burn over the next several years coupled with highleverage in an industry that should face continued competitive pressures. In our view, Sprint could see furtherheadwinds from wireless maturation, a challenged competitive positioning relative to peers, significant cashoutlays to invest in the network to deploy both FDD and TDD-LTE technology, lack of low and mid-bandspectrum assets and handset subsidies.

Investment Risks for Sprint Corp.

Risks for Sprint include: 1) Subscriber losses; 2) slowing wireless industry growth and the related increase incompetition; 3) its high ARPU is proving susceptible in a rising competitive environment; 4) additional capitalraises; 5) high leverage; 6) capital expenditures to resolve network quality issues; and 7) M&A


Sprint Corp. Valuation, Pro-forma for Softbank and Clearwire (All Values in MM, Except per-shareAmounts)

Sou rce: Morgan Stan ley Research , Th omson Reu ters E= Morgan Stan ley Research Estimate Note: Con sen su s EB ITDA as o f 07/1/14


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Sprint Consolidated Quarterly Income Statement ($ in millions)

Sou rce: Compan y Data , Morgan Stan ley Research Note: Pro -fo rma fo r So ftban k an d Clearw ire beg in n in g in 3Q 13 E= Morgan Stan ley Estimates


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Sprint Consolidated Annual Income Statement ($ in millions)

Sou rce: Compan y data , Morgan Stan ley Research Note: Pro -fo rma fo r So ftban k an d Clearw ire beg in n in g in 3Q 13 E= Morgan Stan ley Estimates


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Sprint Cash Flow Statement ($ in millions)



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Sprint Balance Sheet ($ in millions)



Sprint Quarterly Wireless Income Statement ($ in millions)

Sou rce: Compan y Data , Morgan Stan ley Research E= Morgan Stan ley Estimates


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Sprint GMG Quarterly Income Statement ($ in millions)



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Sprint Quarterly Wireless Performance Statistics

Sou rce: Compan y Data , Morgan Stan ley Research Note: Pro -fo rma fo r So ftban k an d Clearw ire beg in n in g in 3Q 13; tran saction su bscribers ref lect U SMan d CLW R


Sprint Annual Wireless Income Statement ($ in millions)

Sou rce: Compan y data , Morgan Stan ley Research E= Morgan Stan ley Estimates Note: Pro -fo rma fo r So ftban k an d Clearw ire beg in n in g in 3Q 13


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Sprint GMG Annual Income Statement ($ in millions)


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Sprint Annual Wireless Performance Statistics

Sou rce: Compan y Data , Morgan Stan ley Research Note: Pro -fo rma fo r So ftban k an d Clearw ire beg in n in g in 3Q 13; tran saction su bscribers ref lect U SMan d CLW R


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COVERAGE UNIVERSE INVESTMENT BANKING CLIENTS (IBC)STOCK RATING CATEGORY COUNT % OF TOTAL COUNT % OF TOTAL

IBC% OF RATING

CATEGORYOverweight/Buy 1080 35% 367 38% 34%Equal-weight/Hold 1339 44% 469 49% 35%Not-Rated/Hold 113 4% 23 2% 20%Underweight/Sell 546 18% 98 10% 18%TOTAL 3,078 957

Data include common stock and ADRs currently assigned ratings. Investment Banking Clients are companies from whom Morgan Stanley receivedinvestment banking compensation in the last 12 months.Analyst Stock RatingsOverweight (O). The stock's total return is expected to exceed the average total return of the analyst's industry (or industry team's) coverage universe, on arisk-adjusted basis, over the next 12-18 months.Equal-weight (E). The stock's total return is expected to be in line with the average total return of the analyst's industry (or industry team's) coverageuniverse, on a risk-adjusted basis, over the next 12-18 months.Not-Rated (NR). Currently the analyst does not have adequate conviction about the stock's total return relative to the average total return of the analyst'sindustry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months.Underweight (U). The stock's total return is expected to be below the average total return of the analyst's industry (or industry team's) coverage universe, ona risk-adjusted basis, over the next 12-18 months.Unless otherwise specified, the time frame for price targets included in Morgan Stanley Research is 12 to 18 months.Analyst Industry ViewsAttractive (A): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be attractive vs. the relevantbroad market benchmark, as indicated below.In-Line (I): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be in line with the relevant broadmarket benchmark, as indicated below.Cautious (C): The analyst views the performance of his or her industry coverage universe over the next 12-18 months with caution vs. the relevant broadmarket benchmark, as indicated below.Benchmarks for each region are as follows: North America - S&P 500; Latin America - relevant MSCI country index or MSCI Latin America Index; Europe -MSCI Europe; Japan - TOPIX; Asia - relevant MSCI country index or MSCI sub-regional index or MSCI AC Asia Pacific ex Japan Index.Stock Price, Price Target and Rating History (See Rating Definitions)


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INDUSTRY COVERAGE: Telecom Services

COMPANY (TICKER) RATING (AS OF) PRICE* (07/30/2014)

Simon FlanneryAmerican Tower Corp. (AMT.N) O (03/28/2011) $96.25AT&T, Inc. (T.N) E (04/24/2013) $36.36BCE Inc. (BCE.TO) O (11/21/2008) C$49.76CenturyLink, Inc. (CTL.N) E (05/19/2014) $39.77Cincinnati Bell Inc. (CBB.N) E (02/12/2013) $3.92Crown Castle Corp. (CCI.N) O (11/11/2009) $74.50CyrusOne Inc (CONE.O) O (05/28/2013) $25.77Endurance International Group Holdings, Inc. (EIGI.O) O (11/19/2013) $13.76Equinix Inc. (EQIX.O) E (05/13/2009) $215.75Frontier Communications Corp (FTR.O) E (05/07/2007) $6.65Gogo Inc (GOGO.O) U (11/15/2013) $17.28Inteliquent (IQNT.O) E (05/06/2013) $11.01Intelsat S.A. (I.N) E (05/28/2013) $19.00Level 3 Communications, Inc. (LVLT.N) E (09/20/2013) $45.31QTS Realty Trust Inc (QTS.N) O (12/19/2013) $27.33Rackspace Hosting, Inc. (RAX.N) O (03/25/2014) $30.94Rogers Communications, Inc. (RCIb.TO) O (04/27/2005) C$42.88SBA Communications (SBAC.O) O (03/28/2011) $108.96Sprint Corp (S.N) U (10/19/2009) $7.76Telephone & Data Systems (TDS.N) E (05/30/2014) $25.28TELUS Corp. (T.TO) E (03/25/2014) C$38.23T-Mobile US, Inc. (TMUS.N) E (05/03/2013) $30.94tw telecom inc (TWTC.O) E (05/16/2013) $41.77US Cellular Corporation (USM.N) U (11/02/2011) $39.52Verizon Communications (VZ.N) O (02/27/2014) $51.76Windstream Corp. (WIN.O) U (11/08/2013) $11.33

Stock Ratings are subject to change. Please see latest research for each company.* Historical prices are not split adjusted.

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