- Company Name
- Sprint Corporation
- Stock Symbol
- Class Period
- January 31, 2019 to April 16, 2019
- Motion Deadline
- June 21, 2019
- Southern District of New York
The complaint charges Sprint and certain of its officers with violations of the Securities Exchange Act of 1934. Sprint is a communications company offering a comprehensive range of wireless and wireline communications products and services that are designed to meet the needs of individual consumers, businesses, government subscribers and resellers. On April 29, 2018, Sprint and T-Mobile US, Inc. agreed to a nearly $27 billion merger.
The complaint alleges that during the Class Period, defendants made false and misleading statement and/or failed to disclose adverse information regarding Sprint’s business and prospects. Specifically, during the Class Period, defendants misled investors by highlighting that Sprint had net postpaid subscriber additions – a closely watched measure of monthly accounts not paid in advance – of 309,000, an increase of 20% from the same period in 2017, while failing to disclose that these additions were not new customers, but instead were driven by free lines offered to existing Sprint customers and the inclusion of less valuable tablet and other non-phone device connections, as well as customers switching their phones from prepaid services to postpaid services, which do not represent new Sprint customers. As a result of this information being concealed from the market, the price of Sprint stock was artificially inflated to more than $6.40 per share.
Then on April 15, 2019, Sprint filed a letter with the FCC regarding an “Application of T-Mobile US, Inc. and Sprint Corporation for Consent to Transfer Control of Licenses and Authorizations,” which stated that “Sprint’s postpaid net additions recently have been driven by ‘free lines’ offered to Sprint customers and the inclusion of less valuable tablet and other non-phone devices, as well as pre to post migrations that do not represent ‘new’ Sprint customers. . . . While the [Company’s] public statements and the individual metrics cited are all accurate, they are incomplete and none are a substitute for a realistic analysis of key factors that are most probative of Sprint’s overall competitive position and prospects.” On these disclosures, the price of Sprint stock fell 4% to close at $5.88 per share on April 15, 2019.
The next day, the FCC letter was referenced in a Wall Street Journal article stating that “Sprint said [in the FCC letter] that its current performance would be unsustainable without the [T-Mobile] merger due to weak network infrastructure and a customer base prone to leave in search of better deals.” The price of Sprint stock fell again on this news to close at $5.64 per share on April 17, 2019.
On April 18, 2019, The Wall Street Journal ran another article on Sprint discussing the merger and Sprint’s disclosures to the FCC, stating that “[w]ith its proposed merger . . . under pressure, the wireless carrier told regulators this week that its performance isn’t as strong as it appears and it will struggle to operate as a stand-alone company.”