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UPDATE 2-Sprint shares up on analyst upgrade, to repay debt

* Credit Suisse upgrades stock, sees Q4 subs break-even

* Analysts see subscriber numbers turning point

* Pays back $1 bln on loan from $4.5 bln facility

* Sprint shares rise 11 pct to $3.44 (Recasts headline and first paragraph, adds analyst quotes, share price update)

NEW YORK, Nov 16 (Reuters) - Shares of Sprint Nextel Corp S.N rose 11 percent on Monday after an analyst upgraded the stock based on expectations that the No. 3 U.S. mobile service is turning the corner on subscriber losses.

The upgrade to “outperform” from “neutral” by Credit Suisse analyst Jonathan Chaplin came as Sprint also announced that it had paid back a $1 billion loan from its $4.5 billion revolving credit facility.

Chaplin said he expected Sprint to break even in terms of subscriber numbers this quarter for the first time since the second quarter of 2007.

The analyst said growth in prepaid services, for which customers pay for calls in advance, is expected to offset losses of postpaid monthly bill-paying subscribers.

“Subscribers in Sprint’s existing retail business should stabilize in Q4, returning to modest growth in 2010 as postpaid losses moderate and prepaid growth continues,” Chaplin said in a research note.

While Sprint has been seeing strong growth in its Boost prepaid business so far this year, it has struggled to turn around its more lucrative postpaid business.

But Hudson Square Research analyst Todd Rethemeier noted that Sprint had already improved its postpaid numbers for two quarters in a row.

“The tide is slowly starting to turn,” Rethemeier said. “When the stock’s trading at around $3, a lot of bad things are priced into that. The market is starting to realize that things are not quite that bad.”

Sprint, which had ended the third quarter with $5.9 billion in cash and equivalents, said it had paid down the $1 billion loan with existing cash. The payment means the company no longer has an outstanding balance on its revolving credit facility, it said.

At the end of the third quarter, Sprint had about $20.9 billion in long-term debt, financing and capital lease obligations.

Sprint shares were up 34 cents at $3.44 in morning New York Stock Exchange trading. (Reporting by Sinead Carew; editing by Gerald E. McCormick and Lisa Von Ahn)

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