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Yesterday CNET questioned the future of Sprint’s (NYSE:S) unlimited data plans. CEO Dan Hesse admitted in a roundtable meeting that Sprint continues to monitor its data usage numbers and reassess its viability every few months. Now that Verizon (NYSE:VZ) has joined AT&T (NYSE:T) in capping off unlimited data usage, Sprint has attracted the heads of the “data hogs.” No doubt, the more strain is put on the network, Sprint's likelihood to start capping off data increases.

However, I believe there are two plays Sprint is banking on that might make concerns over data cap irrelevant.

1. Sprint becomes a carrier of the iPhone 5.
This is looking increasingly likely according to an article on The Street. This goes hand-in-hand with unlimited data— in its perpetual fight against android software, Apple (NASDAQ:AAPL) would love a chance to boost its smartphone market share. iPhone users are supposedly the most notorious “data hogs,” leaving Sprint an excellent alternative to Verizon and AT&T. Oh, and did I mention that Sprint’s unlimited plans are cheaper than either of VZ or T capped plans?

2. The 4G Network
While Sprint may have been the first to launch 4G, it has lost some of the ground it initially made. VZ and T are racing to expand their networks, and it appears that Sprint is struggling to keep up. But Sprint is working hard behind the scenes.

Clearwire (CLWR) is currently Sprint’s 4G service provider. Its stock has been steadily falling because it has been experiencing financial woes. Yet in the last week, Clearwire announced 4G expansion in the New York metro area giving nearly 12 million people (12 million potential Sprint customers) access to its network, and increased coverage in the Seattle area with 100 new cell towers to cover 240,000 people. What is not clear for CLWR is how this increased coverage will affect its financial statements due August 3rd.

Sprint owns 54% of Clearwire, but it recently avoided acquiring the entire company due to its financial struggles. Sprint claimed it wanted to remain independent of a network provider. Yet in April, S agreed to pay CLWR 1 billion for 2 years of use on its next generation network. As the most significant holder of CLWR, S likely knows what’s coming from CLWR’s earnings call on August 3rd.

Note of Interest: Sprint announced that it is pushing back its expected discussion of its 4G network from its earnings call on July 28th to this fall due to “unforeseen circumstances.” Rumor has it that Sprint has been talking with LightSquared over an LTE 4G network, though neither has made an official statement.

But it gets a little dicier.

LightSquared is a private whole-sale-only high-speed network start-up, backed by Phillip Falcone’s Harbinger Capital hedge fund. Earlier this month it raised an additional 265 million from new and current investors. (Harbinger has raised 2.3 billion for LightSquared over the last 12 months.)

On July 13th, CNET posted an article revealing that Sprint and LightSquared would announce a 15-year 5 billion network-sharing agreement on Sprint's conference call. Falcone sent a letter to his investors announcing an imminent deal between LightSquared and Sprint. On July 19th, Sprint stated it would delay an announcement of the 4G network until the fall. Interesting.

LightSquared is not without its own problems--the frequency its network uses is disruptive to some GPS signals. However, it has outlined a plan to eliminate interference, preserve GPS, and expand to its target market: rural and underserved areas, in the words of Sanjiv Ahuja, LightSquared Chairman and CEO. Sprint is waiting.

Sprints needs LightSquared to Succeed

  • Considering Sprint’s current battle against T as a third tier carrier, and its uncertain 4G future, the company has played its cards right.
  • The addition of an iPhone will only bring good to Sprint.
  • Sprint currently runs on Clearwire’s network, and it appears Clearwire is still expanding-- even if at a slow rate (Seattle and New York). With the billion dollar deal in April, the company has locked in whatever coverage Clearwire can provide over the next 2 years.
  • LightSquared has captured increasing attention from investors, especially since it has outlined a plan to work around its GPS interference. However, it has yet to be approved. Sprint has made it clear that it wants to remain independent of a 4G provider and is currently shopping between Clearwire and LightSquared. I believe the rumors of a 15-year deal with LightSquared are serious and dependent on FCC support. Sprint is waiting to see it approved.

Not that any other carrier isn’t looking far into the future of their networks, Sprint’s life depends on LightSquared's success. Playing hard ball is Sprint’s only way out.

Sabrient Systems rates Sprint as a Buy. I would advise waiting to see what comes out of Sprint’s Earnings on July 28th and Clearwire earnings on August 3rd and pay close attention to LightSquared’s progress. We’ll see what Sprint is made of this fall.



Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 2 Plays Remain Up Sprint's Sleeve