The third-largest U.S. wireless carrier
Sprint Nextel Corp
) plans to launch its high-speed 4G LTE networks in 100 additional
cities across US in the coming months. The LTE offers 10 times
faster speed than 3G.
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The company's LTE services currently cover 19 metros including
Atlanta, Baltimore, Dallas-Fort Worth, Houston, Kansas City,
Missouri/Kansas City, Kansas, San Antonio and surrounding
communities. Sprint would add more markets in New York, Chicago,
Los Angeles, Boston, Charlotte, North Carolina, Miami, New Orleans,
Philadelphia and Washington D.C.
The LTE expansion is the part of the multi-billion dollar
restructuring program known as the 'Network Vision', 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 completed by the end of
In mid-July, Sprint had made its LTE debut in five major markets -
Atlanta, Dallas, Houston, Kansas City and San Antonio. 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.
Sprint is about more than one and half year behind the wireless
Verzion Communications Inc.
) and 10 months behind the second wireless carrier
) in deploying LTE networks.
Verizon is leading the industry in LTE deployments, which covers
370 markets with more than 75% of the U.S. population. The company
expects to expand its LTE networks to the entire nationwide 3G
footprint by mid-2013. AT&T LTE service is currently available
in 60 markets and expects to reach 100 by the end of the year.
AT&T expects the LTE deployment to be almost completed by the
end of 2013.
No doubt, the 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