) primarily competes with AT&T (
) and Verizon (
) in the mobile phone business. The company has been looking to
rebuild its deteriorating image with multiple initiatives like
improving customer service, network modernization, moving iDEN
subscribers to a CDMA platform, investing in WiMax 4G, and
expanding smartphone offerings. While these moves could lift core
mobile phone operations, Sprint can also benefit from strategic
efforts to tap new markets.
Our price estimate for Sprint's stock stands at
, in line with market price. Upside stemming from a push into
markets like smart cars and smart grids could present a buying
opportunity for investors.
Sprint's Push Beyond Mobile Phones
Sprint is investing in technology that would add wireless
connectivity to cars, a market that Sprint believes could bring
revenues of over $1 billion within a few years. The technology
would link mobile devices and applications to cars in order to
enhance communication, navigation, and entertainment features.
The move could create substantial upside for Sprint, as it
positions its operations to tap a market with large growth
potential. According to research from Gartner, roughly 4% of U.S.
cars currently feature wireless connectivity. Comparatively, mobile
phones boast roughly 90% penetration in the U.S., so the
opportunity for connected automobiles to close the gap is large.
Gartner anticipates that more than half of all premium vehicles in
the U.S. will support apps by 2013, with half of all mass market
cars supporting the technology within 3 years thereafter.
Sprint has also partnered with ECOtality, an electric car
charging company, to connect its electric car chargers throughout
the country. New developments will help drivers locate charging
facilities through GPS, enable data tracking on charging habits,
and facilitate other processes like billing and digital content
delivery. The move represents a foray for Sprint into the
smart-grid arena, a next-generation network concept to monitor
electricity consumption of households and businesses.
Sprint's effort to expand its operations could present an
interesting opportunity for investors, as the company increases its
mix of revenues beyond core mobile phone segments. The trend could
effectively expand the base of U.S. mobile internet subscribers, a
metric to which Sprint's stock value is particularly sensitive. The
chart below highlights the impact to Sprint's stock value from
changes in this metric.
Register to win a free iPad. Visit our home page
You can see
the complete $4.35 Trefis price estimate for
Sprint's stock here.