) has announced to close down its acquired portion of
United States Cellular Corp.
) network on Oct 31, 2013. The company has been notifying U.S.
Cellular customers of St. Louis metropolitan area and some parts
of Missouri and Illinois markets of this shut down to expedite
closure. The company will then use this free wireless spectrum to
improve service capabilities of its own network across the
Last November, Sprint struck a $480 million deal with U.S.
Cellular - a subsidiary of
Telephone & Data Systems Inc
) - that entailed the sale of U.S. Cellular's Chicago, St. Louis,
central Illinois and Midwest markets to Sprint. The deal included
the handover of personal communications service (PCS) spectrum
and approximately 585,000 customers, accounting for around 10% of
U.S. Cellular's customer base.
The closure is intended to resolve the spectrum issues in LTE
expansion faced by both parties. Spectrum constraint is the
biggest challenge that the wireless industry is currently facing.
Therefore, any industry consolidation that takes place through
merger, acquisition or sale of assets as in the case of this deal
has a lot to do with wireless spectrum.
For Sprint, the agreement means more spectrum that will
support its LTE coverage and services in key markets like Chicago
and St. Louis. The company received 20 MHz of spectrum supporting
its 1900 MHz band in Chicago and other markets, and 10 MHz of
bandwidth in St. Louis market. Sprint also completed the
Clearwire acquisition, thereby gaining full rights over Clearwire
including access to its radio frequency spectrum ranging 2.5 GHz,
utilized in providing services using 4G 802.16e mobile WiMAX
As part of the Network Vision strategy, the company's LTE
services currently covers over 151 markets with 20,000 sites on
air. In 2013, the company expects to have LTE coverage for
approximately 200 million customers. 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 bodes well for Sprint's long-term
growth. Hence, the network restructuring is expected to generate
$10 billion to $11 billion in savings over a seven-year
(2011-2017) time frame. Moreover, Sprint's OBITDA margin is
expected to grow 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 from its core operations.
Sprint, which operates with telecom giant
), has a Zacks Rank #3 (Hold).
SPRINT CORP (S): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
TELEPHONE &DATA (TDS): Free Stock Analysis
US CELLULAR (USM): Free Stock Analysis Report
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