) announced the launch of 4G LTE services in 34 additional
markets, spreading its coverage to 185 markets. We believe the
expansion will not only drive revenues but will also give the
company a better competitive position.
Sprint's core platform business also depends upon the success
of its multi-billion dollar restructuring program known as
Network Vision. Through this plan, the company is concentrating
on CDMA, WiMAX and LTE technologies that led to the termination
of the Nextel platform (iDEN business) in Jun 2013. Sprint
intends to cover around 200 million customers by this year-end
through this program.
We believe 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 bode
well for Sprint's long-term growth. Hence, network restructuring
is expected to generate $10 billion to $11 billion in savings
over a seven-year (2011-2017) period.
Moreover, Sprint's OBITDA margin is expected to grow by
1200-1600 basis points (bps) by the end of 2014. About half of
the margin expansion would come from the Network Vision plan and
the other half will come from its core operations.
However, despite the company's strong efforts, it continues to
lag the top two carriers -
Verizon Communications Inc.
) - in LTE deployments. AT&T and Verizon have a mammoth LTE
coverage of approximately 400 and 500 markets, respectively. We
believe that given more than 95% U.S. wireless penetration,
competition is likely to remain intense. This will keep top and
bottom line results under pressure as the carriers compete for
additional market share.
Although Sprint has started reducing its net loss in the
post-paid subscriber base, we remain concerned about the future
return from this trend. If this trend does not continue, revenues
from Sprint's wireless segment will stressed once again as it was
in the past several years.
Sprint Corp. which operates with
) currently has a Zacks Rank #3 (Hold).
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