Sprint Corp (NYSE:S) is negotiating with RadioShack Corporation (NYSE:RSH) to acquire leases on some of its more than 4,000 stores. In a Bloomberg report, an unnamed source said that the lease agreement would be a part of RadioShack’s bankruptcy plan, as the ailing electronics retailer is working on a restructuring plan.
Having endured losses for 11 quarters in a row, RadioShack will be filing for a Chapter 11 bankruptcy protection by February this year. On the other hand, Sprint Corp (NYSE:S), which is working to prevent slipping to 4rth place among U.S.’ wireless carriers, is keen on acquiring additional store locations to add to its 1,100 stores, which is way below the figure for its competitors. Verizon Communications Inc. (NYSE:VZ) operates 1,700 stores, while both T-Mobile US Inc (NYSE:TMUS) and AT&T Inc. (NYSE:T) runs more than 2,000, in addition to independent retailers.
Acquiring some of RadioShack’s stores would help Sprint Corp (NYSE:S) in increasing its small number of branded locations. Specifically, the trend among wireless carriers is to set up “destination stores” where they can showcase new products with an open floor design. Such stores, where customers can actually touch and feel the latest devices, tends to bring in more subscriber and helps in boosting sales.
Sprint Corp (NYSE:S) recently reported losing 272,000 postpaid subscribers, and it has also suffered a fine of $105 million from the Federal Communications Commission on unauthorized billings. The carrier is also relying on third party retailers for subscriber influx, as well as sales. A successful deal with RadioShack Corporation (NYSE:RSH) will serve to reverse the company’s dwindling subscriber base by increasing its market presence and beefing up its distribution platform. “Sprint may believe that RadioShack has good locations to open Sprint stores,” according to Nomura Holdings Inc. analyst Adam Ilkowitz, as quoted by Bloomberg.
This article has been written by Nonito Guntan.