FBR adds Sprint Nextel to top picks

On Friday, Sprint said it plans to spend $7 billion on a network upgrade, two years ahead of its original plan and will raise funds to fill the cash shortfall.Sprint, which is selling the iPhone for the first time, is also expected to pay Apple an undisclosed sum of money for the right to sell the popular iPhone.FBR, which has an outperform rating on Sprint, said it expects long-term benefits from iPhone’s addition to Sprint’s portfolio but sees substantial near-term margin pressure from higher subsidy costs.”We expect 4G cash prepayments for usage post financial year 2012, mitigating bankruptcy risk,” analysts at FBR said in a note.The brokerage expects the iPhone to drive gross additions, lower subscriber churn, and increase Average Revenue Per User (ARPU).FBR added Sprint to its top picks list and removed AT&T (T.N).Shares of Sprint, which have fallen 28 percent since Friday, closed at $2.22 on the New York Stock Exchange on Monday.

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