The third-largest U.S. wireless carrier
Sprint Nextel Corp.
) added 4G LTE services to four more cities namely Baltimore,
Gainesville, Manhattan/Junction City and Sedalia.
The move is part of the multi-billion dollar restructuring program
known as Network Vision plan, which aims to combine 3G and 4G
technologies into one seamless network. This would lead to the
efficient use of capital, reduction of cell sites, the elimination
of dual networks, backhaul efficiencies, reduced churn, lower
roaming charges and energy cost savings. As a result, the plan is
expected to generate $10 billion to $11 billion in savings over a
seven-year period (2011-2017). The company expects the Network
Vision deployment to be over by the end of 2013.
The expansion will strengthen Sprint's competitive position in LTE
deployments. Sprint is about a year and a half behind the wireless
Verzion Communications Inc
) and 10 months behind the second wireless carrier
) in deploying LTE networks.
Sprint made its LTE debut in five major markets - Atlanta, Dallas,
Houston, Kansas City and San Antonio - in mid-July. The company
expects to complete nationwide deployment by the end of 2013. The
LTE coverage is expected to reach more than 120 million people (or
roughly half of its CDMA footprint) by the year-end and 250 million
by next year.
Since Verizon launched its 4G LTE in December 2010, it has deployed
the service in 337 markets, covering more than 200 million people
(nearly 75% of the U.S. population). Verizon expects to expand its
4G networks to the entire nationwide 3G footprint by mid-2013.
AT&T LTE service is currently available in 47 markets covering
more than 275 million in population. AT&T expects this
deployment to reach to 80% of the U.S. population by next year.
In addition to the LTE rollouts, Sprint also plans to upgrade its
existing 3G networks in Baltimore, Boston and Washington DC.
No doubt, these LTE investments will dilute Sprint's free cash flow
for the next two years. However, liquidity is expected to improve
once LTE is fully deployed.
We are maintaining our long-term Neutral recommendation on Sprint.
For the short term (1-3 months), the stock retains a Zacks #3
SPRINT NEXTEL (S): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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