RadioShack Sheds More Light On Sprint Strategy

Counting on operational and customer synergies
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RadioShack provided more specifics on its proposed melding with Sprint in a filing with the Securities and Exchange Commission yesterday.

Fort Worth, Texas – RadioShack provided more specifics on its proposed melding with Sprint in a filing with the Securities and Exchange Commission yesterday.

Under the prepackaged bankruptcy plan, RadioShack, through its proposed new owner Standard General, would retain about 2,100 stores. Of those, up to 800 would be leased by Sprint, about 950 would be leased by RadioShack, and the balance would be considered independent RadioShack stores.

The would-be partners said the deal would allow Sprint to quickly and dramatically increase its retail footprint with operational synergies; simplify and improve the profitability of RadioShack’s mobility business; and increase foot traffic synergistically by drawing both companies’ customers.

The parties would work together on store design, format, signage, fixtures and logo, and RadioShack will commit $88 million toward store improvements.

Sprint would be the dominant brand on exterior store signage, comprising about 60 percent of the space, and would also be the focal point in any store advertising and shopping center marquees.

Sprint would also be the stores’ sole wireless carrier, aside from any proprietary mobile programs developed by RadioShack.

Inside, the carrier will open Sprint shops within all leased locations within one year of the bankruptcy sale. The shops would be up to 600 square feet in size, and will generally be located in the front right section of the stores. Sprint would be responsible for building, equipping, staffing and supplying the shops, as well as for post-sale customer support, and will keep any revenue generated by the sections.

The partners will also establish a revenue sharing arrangement for the stores, and Sprint will pay RadioShack a portion of the rent for the leased real estate.

The revenue split for accessories sales and repair services has yet to been determined.

The partners set a seven-year term for the pact, which is subject to approval by the federal bankruptcy court in Delaware.

Standard General has agreed to pay $3,000 per store, plus 85 percent of the value of its inventory and petty cash.

But other bidders, including Amazon.com, may enter the picture with higher offers when the company is auctioned off, possibly later this month.

The section of the filing detailing the Sprint-RadioShack partnership is available here.

Follow TWICE.com for continuing coverage of RadioShack’s reorganization.

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