S&P: Sprint unaffected

Sprint Corp.'s (BBB-/stable/--) announcement of its decision to recombine its wireline FON and wireless PCS tracking stocks by issuing 0.5 FON shares in exchange for each PCS share would not affect the ratings or outlook on the company.

Sprint indicated that its board of directors expects to declare the regular quarterly dividend of 12.5 cents per share on all FON shares, including those issued in the recombination, which would result in a meaningful $260 million increase in the annual dividend payout. Although the larger dividend will not affect the existing rating, it somewhat dampens the impact of rising free cash flow in the PCS business and overall financial profile improvement achieved by Sprint during the past 18 months.

S&P said its analytical treatment of Sprint will not change, because the company is currently analyzed on a consolidated basis. Furthermore, eliminating the tracking stocks does not affect the positioning of assets and liabilities within the legal corporate structure.

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