Sprint Expands 4G Network, Reduces Debt

Sprint Nextel (S) has expanded its fourth-generation (4G) wireless broadband network to two more US cities. The third largest US carrier has officially launched commercial services in San Antonio and Austin in Texas. The company’s 4G services now covers about 25 markets in the US, with plans to address more than 120 million people by the end of 2009.

Subscribers across the newly launched markets can now enjoy lightning fast mobile broadband experience by paying just $10 per month over their existing 3G wireless data plans. The 4G WiMax network offers up to 10 times faster network speeds than the existing 3G deployments. The download speeds enabled by the 4G WiMax network average 3−6 megabits per second (Mbps), with peak speeds exceeding 10 Mbps.

Sprint offers its 4G service under the "Sprint 4G" brand and leverages the WiMax (a mobile broadband technology) network operated by Clearwire Corporation (CLWR) in which it holds a 51% stake. Sprint recently announced its plan to invest an additional US$1.2 billion in Clearwire to facilitate the 4G service roll-out.

The 4G WiMax service is expected to play a critical role for Sprint’s survival in the domestic wireless market, given its continued market share losses to larger rivals. The company plans to continue the aggressive network deployments through 2010 with 4G service launches in key US markets such as Boston, Houston, New York , San Francisco and Washington D.C.

Sprint’s peers AT&T (T) and Verizon (VZ) are preparing to deploy their own 4G networks in the 2010−2011 timeframe based on the Long-Term Evaluation (“LTE”), an emerging 4G wireless standard. LTE has demonstrated higher throughput levels than WiMax in technical trials.

Sprint has reportedly repaid US$1 billion debt using its existing cash resources. This has effectively erased all outstanding balance on the company’s US$4.5 billion revolving credit facility.

This significant debt reduction initiative follows the warning issued by Standard & Poor’s Ratings Services for a possible credit rating downgrade due to the company’s lackluster operating results through third-quarter 2009. The company reported a bigger net loss and lower revenue in the last quarter due to the weak performance of its postpaid wireless business.

Sprint is increasingly focused on cost reduction as a declining subscriber base continued to weigh on its top-line. The company recently revealed a workforce reduction plan as it targets to downsize up to 2,500 jobs by the end of the current year. This is expected to help the company to reduce costs by at least $350 million.

While Sprint’s 4G expansion and cost-cutting measures appear encouraging, the company is expected to remain challenged by the sustained erosion in its wireless contract customer base through 2009. However, the healthy growth at Boost Monthly prepaid mobile business may offset most of these losses.

Comments

[Ponchovilla]

As a Sprint Customer for 17 years their customer service sucks. Some network problems depending on location. It's coverage , coverage coverage. So many legitimate complaints are ignored. Then bad news travels at the speed of a 4G network. I'm switching to Verizon because Sprint treat's me like a $20/mo in arrears single user instead of a $220/mo on time payer. 4 phones and 3G modem .This is a old dog that won't hunt outdoors.

2009 Nov 18 07:10 PM

[jonnyh]

Don't give up on Sprint because you're going love 4 G and you'll be doing it through Craig Mc Call who Started AT&T's phone service.
Called CLEAR I will bet you that you will want to comeback in no time. And then you will be stuck with tech that will be delayed.
WIMAX has a range that will be deployed at 15 mile radius - just think what it will be like to not be dropped in those conversations and also think about the computers that will be the customer service -The bugs are almost completely wiped out and the future with the company will be a great experience.

2009 Nov 18 07:36 PM

[Nettligent]

Verizon and ATT are the Worst. Sprint made many mistakes in the past and I do see much improvements and progress, starting with CEO. New Sprint employees are doing much better works. Hopefully, Sprint staying focus, few solid steps, and not doing anymore stupid tricks.
Disclosure: I starting accumlate Sprint shares in early December 2009.

2009 Nov 20 11:32 PM