Sprint Nextel (NYSE:S) is the third-largest carrier in the U.S., serving 48 million customers directly. On Dec. 7, 2012, Sprint announced an agreement to acquire a 50% stake in Clearwire Corporation (CLWR) it does not currently own for $2.97 per share. With Clearwire's huge spectrum assets and SoftBank's (OTCPK:SFTBF) capital backing, Sprint Nextel could soon be a big force to compete in the new landscape as spectrum resources become scarcer and high-speed 4G LTE becomes a widespread standard. In this article, the recent developments for LTE networks for Sprint Nextel and Clearwire will be updated.
Sprint's Network Vision
"Network Vision is Sprint's plan to consolidate multiple network technologies into one new, seamless network with the goal of increasing efficiency and enhancing network coverage, call quality and data speeds for customers across the United States. In addition to deploying a new 3G network, Sprint will roll out LTE nationwide. Sprint has launched 4G LTE in 49 markets - including Dallas, Houston, Atlanta and Baltimore - and sites are on-air and implementation is under way in hundreds more," as quoted from Sprint's official website.
In the last Q4, 2012 management discussion, Sprint's management indicated that the company is not changing the outlook of 12,000 sites for Q1, 2013. Sprint had zoning completed on nearly 29,000 sites and leasing completed on over 27,000 sites, with a 34% increase over Q3 for both. Sprint had doubled the number of cities under construction to over 450, and the company had now launched 4G LTE in 58 cities with nearly 170 more expected to launch in the months to come. With over 8,000 sites on air, the number is nearly doubled as compared to 3 months ago.
Highlights for LTE
- Competitive speed: 6-8 megabits per second for downlink and 2-3 megabits per second for uplink. The performance will continue to improve as the company brings four, five clusters on air and continues to tune the network.
- Increasing capacity and density: Sprint is expected to have LTE coverage for approximately 200 million people by the end of 2013 or early 2014.
- 800MHz spectrum: LTE on 800 is now planned to commence in Q4, 2013.
It is a critical step for Sprint to shut down the Nextel platform in the middle of the year, so the company can remove the incremental expense and operating costs of running two separate networks. This will also enable the company to improve the service level on the Sprint platform by redeploying 800 MHz spectrum to CDMA voice and LTE. 2013 will be an important year for Sprint with the modernization of the network and shutting down of Nextel network.
Clearwire's 4G LTE
According to Seeking Alpha's earnings call transcript, Clearwire is making significant progress on LTE Advance-ready network. The company began to ramp up building activities in Q4, 2012 and exceed the target of 800 fully commissioned sites with more than 1,000 LTE X sites awaiting connection to Sprint's core network at year-end. The company remains on track to meet the 4G MVNO agreement build milestones of 2,000 LTE sites on air by June 2013, increasing to 5,000 LTE sites on air by December, 2013. Clearwire could receive a series of prepayments amounting $350 million from Sprint (with 48.1% stake in Clearwire) over a two-year period if Clearwire meets certain LTE deployment target by June, 2013, according to Zacks' report.
Highlights for LTE Advanced-ready
- Peak speed: Early test of the initial LTE Advanced-ready sites had produced peak downlink speeds of about 60 megabits per second. By leveraging TDD systems, these downlink speeds can be improved significantly by further optimizing the amount of spectrum resource assigned to the downlink.
- Next release: The next release of LTE Advanced technology, with 2.5 gigahertz band standardized for carrier aggregation, can potentially offer the fastest speeds with the deepest capacity network in the nation by leveraging the existing microwave back-haul network.
Clearwire's huge spectrum assets in the 2.5 GHz band are widely used in the South-East Asian countries for TDD-LTE technology. The initiation of international data roaming tests with China Mobile (NYSE:CHL) and China Mobile Hong Kong on Clearwire's trial network in Phoenix had shown early success. This is a positive development toward global broadband data access on a single device. China Mobile Ltd., ranking as the largest mobile carrier in the world with over 722 million subscribers, continues to make significant progress on its TDD-LTE build and is now focusing on expanding it to 200,000 TDD-LTE site networks by the end of 2013. It is important to know that, "China has announced plans to award TDD-LTE spectrum licenses that will use the same 3GPP Band class 41 as Clearwire and GTI members, including Softbank Mobile, across the entire 190 Megahertz of their 2.5 Gigahertz spectrum, which we believe will result in significant economies of scale and innovation for us and our partners," as reported in Seeking Alpha earnings transcript. In addition, Bharti Airtel in India also launched TDD-LTE in its third city, Pune. Softbank Mobile in Japan introduced 6 new TDD-LTE smartphones and saw of doubling of their TDD-LTE subscribers to more than 700,000 customers.
Sprint is still behind the wireless giant Verizon Communications Inc. (NYSE:VZ) and the second wireless carrier AT&T Inc. (NYSE:T) in deploying LTE networks. Verizon Wireless, a joint venture of Verizon Communications, 55%, and Vodafone Group PLC (NASDAQ:VOD), 45%, is the largest wireless communications services provider in the United States with 98.2 million subscribers as of Q4, 2012. Verizon Wireless indicated its 4G LTE network covers 94 percent of the population in what it calls its Philadelphia Tri-State Region and 89 percent of the population of the country. Verizon Wireless continues to be the operator of the nation's largest 4G LTE network. AT&T also aims to enhance its high-speed wireless network and is on track to deploy 4G LTE services as soon as possible to achieve the set target to connect 300 million people in the U.S. by 2014 end.
In short, Sprint and Clearwire are set to expand aggressively into LTE market. By completing Softbank's $20B acquisition deal, Sprint will be much better equipped to compete with Verizon Wireless and AT&T. As the trend shifts toward 4G LTE, Sprint still has a lot of upside potential.
Note: Investors and traders are recommended to do their own due diligence and research before making any trading/investing decisions.
Disclosure: I am long S, CHL, VOD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.