Sprint Battling Its Balance Sheet, in Addition to Other Carriers

When Sprint (S) - Get Report reports fiscal fourth quarter results before the market open on Tuesday, Sprint CEO Marcelo Claure will pitch investors on the company's efforts to repair its balance sheet while cutting costs and luring customers that have good credit.

Wall Street expects a loss of 12 cents per share as the fourth-largest U.S. wireless carrier continues its turnaround.

Sprint has offered new customers 50% off if they switch from AT&T (T) - Get Report , Verizon (VZ) - Get Report and T-Mobile USA (TMUS) - Get Report , among other promotions. T-Mobile's MetroPCS returned fire, offering customers 40% if they "break up with Sprint."

"Despite the perception of comparatively more robust promotional activity out of Sprint, we expect net-adds to come in below levels achieved in prior quarters," Barclays Capital analyst Amir Rozwadowski wrote in an earnings preview.

Barclays expects 100,000 net additions of clients for Sprint with post-paid bills, which are more lucrative than pre-paid accounts.

Jennifer Fritzsche of Wells Fargo Securities LLC is less generous,  calling for a net loss of 25,000 postpaid subscribers. "We may be too conservative, but Sprint made a conscious decision in [the quarter] to prioritize higher-quality subscribers and churn off certain customers with lower credit scores," she wrote.

Sprint is hardly in a position to lecture subscribers about their credit. The carrier has nearly $34 billion in debt, with $2.3 billion maturing in December.

The telecom has gotten creative to improve its balance sheet, though.

Sprint announced the second tranche of financing tied to mobile devices on Friday. Sprint sold $1.1 billion worth of mobile devices to a company backed by parent Softbank, and will lease the devices back. The wireless carrier also signed a $2 billion financial package with Mizuho Bank.

The company had a similar $1.3 billion sale-lease back of devices last fall, and announced a $2.2 billion deal involving cell tower equipment this month.

UBS analyst John Hodulik expects Sprint to raise another $1 billion to $3 billion in similar deals involving wireless spectrum licenses, land and other equipment in fiscal year 2016.

"With this new funding source and $6 [billion] of liquidity at the end of [December, 2015], we believe the company has sufficient funding to operate its business and redeem $4.6 [billion] in debt maturing over the next 18 months," he wrote.

Hodulik expects Sprint's Claure to outline a plan to stabilize revenue and generate positive free cash flow at the end of the fiscal year, through cost cuts and other steps.

The balance sheet and finding more savings will trump concerns about weakness in its subscriber base, Wells Fargo's Fritzsche suggested.

"While we recognize that optically lower sub growth is difficult for a company trying to turn the ship, we believe the main debate on Sprint these days is centered around liquidity and its ability to return to positive free cash flow," she wrote. "To be honest, about 50% of the clients we speak to on the name still think a restructuring is in Sprint's future."