The third-largest wireless carrier in the U.S.,
Sprint Nextel Corp.
) continue to expand its high-speed 4G Long Term Evolution (LTE)
technology in the country by adding 11 new markets. The new
markets also include Harrisburg, Pa., South Bend/Mishawaka, Ind.,
Muncie, Ind., Peabody, Mass., and Salina, Kan.
Proliferation of smartphones and tablets has increased the
demand for much faster network services. So, in order to meet the
increasing subscriber demand as well as to compete with early
Verizon Communications Inc.
), Sprint is continuously launching its 4G LTE services across
the U.S. markets.
Presently, Sprint has presence in 43 markets and is
significantly behind Verizon and AT&T that have presence in
441 and 103 markets, respectively. The company has started
offering 4GLTE service from July and plans to successfully deploy
its LTE services to cover its nationwide network by the end of
2013, encompassing more than 250 million customers with 22,000
cell sites. The successful deployment will not only allow the
company to sideline its existing WiMax Network, but will also
help it to reduce cost by installing fewer cell sites.
The development is part of Sprint's network upgrade plan,
Network Vision, which aims to combine various 3G and 4G
technologies into one seamless network; hence leading to
efficient use of capital, reduction of cell sites, the
elimination of dual networks, backhaul efficiencies, reduced
churn, lower roaming charges and energy cost savings.
On the flipside, we believe that increased investment for the
deployment of LTE networks across the U.S. by 2013 will curtail
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 Zacks
#3 (Hold) Rank.
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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