) primarily competes with other major mobile operators like
) and Verizon (
) in the mobile business. There were speculations as to whether
Sprint will get Apple's (
) iPhone or not, but given recent developments during the 2011
Consumer Electronics Show, it now appears to be a foregone
conclusion. Looks like Apple wants to go with LTE technology for
Clearly AT&T is going to feel some repercussions as a result
of Apple's decision, and the company is accordingly planning to
mitigate the potential downside. We recently wrote an article
assessing AT&T's outlook into 2011 (
Life After iPhone Exclusivity - The Outlook for
But what about the other operators? How might Sprint, for
example, be affected by Verizon's move?
Outside of its lost opportunity of carrying the iPhone, Sprint
actually has little to fear. Below we analyze this case.
Our price estimate for Sprint stands at $4.35
, which is roughly in line with market price.
Sprint Has Already Withstood the Brunt of iPhone-Driven
When AT&T initially launched the iPhone, Sprint was already
struggling with subscriber losses as many of its customers switched
to AT&T or Verizon. A Spring customer keen on getting the
iPhone would likely already have left Sprint to do so. As Sprint is
now showing signs of improvement in several metrics including
customer satisfaction, network performance and subscriber losses,
it is difficult to imagine a large scale defection to Verizon
driven by the iPhone.
Sprint has been steadily improving its selection of smartphones,
which should help the company remain competitive with AT&T and
Verizon. Sprint is now selling WiMax compatible smartphones with
HTC EVO Shift 4G. A RIM's WiMax compatible tablet will also be
coming to Sprint's network. We've previously examined the upside to
Sprint's stock value should this strategic initiative pay off (
45% Upside to Sprint if Smartphone Strategy
Sprint will continue to be competitive on price even when it
comes to 4G plans. It is offering unlimited 4G data service for
$69.99 per month. Its competitor Verizon charges more, while
AT&T does not offer an unlimited data plan at all.
Sprint is modernizing its network to permit the addition of LTE
services in the future and migrate its iDEN subscriber base to CDMA
network. The company also plans to decrease the number of its cell
sites from around 66,000 to 46,000 in the U.S., leading to notable
cost savings. We've previously analyzed the impact these cost
savings could have on the company's stock value (Sprint Investing
in Network Modernization, Upside Potential to Stock).
With multiple strategies on tap to keep Sprint in a competitive
position, we believe that any incremental subscriber losses
stemming from Verizon's iPhone launch will have a limited impact on
the company's value.
How do you think Sprint's market share might be affected in
the years ahead? Let us know your thoughts by providing feedback
in the comment box below. You can also assess the impact of your
forecast on Sprint's stock value by dragging the trend line in
the modifiable chart above.
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You can see
the complete $4.35 Trefis price estimate for
Sprint's stock here.