Buzz Over Sprint HTC Launch - Analyst Blog

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Going by the rumor mills, Sprint Nextel Corporation ( S ) is set to launch another smartphone in collaboration with HTC. The telecom carrier is expected to unveil HTC's latest smartphone, One X on April 4, in New York. There is no confirmed news but market rumors suggest that this new smartphone can be Sprint's first LTE handset.

Sprint is switching to 4G LTE technology from its current 4G WiMax (a wireless broadband technology) network. The company plans to launch its own LTE networks in the 1.9 GHz band in mid 2012 and expects to complete the deployment by year-end 2013. However, the recent buzz around Sprint's smartphone launch has also raised expectation over disclosing the day for Sprint's LTE launch.

Initially, LTE services will be deployed in six markets including Atlanta, Baltimore, Dallas, Houston, Kansas City and San Antonio. The deployment of the first multi-mode base station (cell sites) was completed last year and the company expects to bring 12,000 sites by the end of this year. With these cell sites, Sprint plans to cover more than 120 million people (or roughly half of its CDMA footprint).


The LTE coverage is expected to extend to more than 250 million customers with 22,000 cell sites by 2013. Sprint expects the Network Vision deployment to be over by the end of 2013, two years ahead of the original schedule.

Going back to the smartphone portfolio, Sprint expects to introduce 15 4G LTE devices this year, including handsets, tablets and data cards. Sprint introduced the first three Sprint Direct Connect Android smartphones -- Kyocera DuraMax, Kyocera DuraCore and Motorola Admiral -- in the fourth quarter, and expects to unveil three 4G LTE devices --  the Galaxy Nexus, LG Viper smartphones and the Sierra Wireless Tri-Network Hotspot this year.

In mid-October 2011, the company added iPhone 4 and 4S to its leading portfolio that are being well adopted by the market. The iPhone would improve overall churn by more than 10% and increase network efficiency by more than 50% compared to other smartphone customers.

Further, Sprint expects iPhone to be accretive to EBITDA from 2015, as it will recover costs quickly by generating 20% higher monthly margins than other smartphones. Over the long term, iPhone is expected to generate $7-$8 billion of profits over the next four years with $1-$1.2 billion additional gross subscribers and $6-$6.8 billion subcribers profitability.

We believe this strong line-up of handsets will add new customers while retaining the old, thereby leading to increased subscriber growth, reduced churn and a competitive edge over peers like AT&T Inc. ( T ) and Verizon Communications ( VZ ).

We currently maintain our long-term Neutral recommendation on Sprint. For the short term (1-3 months), the stock retains a Zacks #3 Rank.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: S , T , VZ

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