Sprint Delays 4G Plan Until The Fall

Sprint had promised to reveal its 4G plans this summer, but has pushed its deadline out to "the fall", raising further question marks over its very complicated strategy. CEO Dan Hesse told a press briefing at the company's headquarters that "all of your questions will be answered" in the fall, but in the meatime, doubts are just intensifying about Sprint's future as a mainstream 4G contender.

Focal Points:

• It can be assumed that Sprint is delaying its announcement because of difficult negotiations about the future relationship with Clearwire; and to wait for greater clarity around the viability of LightSquared (with which Sprint has reportedly finalized a network sharing deal), and perhaps around the proposed AT&T/T-Mobile merger. It will argue that its Network Vision modernization scheme is already underway, improving performance and cost efficiency for its 3G services and shortening the time that will be required to turn on 4G, when required. But all that still leaves Sprint looking like a company that has lost its way again, wasting the powerful advantage it once built in mobile broadband.
• While Verizon Wireless this week hit its target of offering commercial LTE services in 100 markets, and AT&T will start rolling out soon, Sprint's position as the first 4G operator in the US - via its Clearwire WiMAX-based joint venture - is rapidly turning into a liability. Only about a year into significant 4G revenues, it already faces a major system upgrade, and assuming it adopts LTE instead of, or alongside, WiMAX, it will be doing that 1-2 years behind its main rivals.
• Its problem is compounded because Clearwire is failing to maintain its initial momentum and is seeing its 4G headstart eroded by Verizon, in terms of coverage and data rates - the JV is no longer enough to ensure Sprint remains a contender in 4G services and will need its efforts supplemented by new financing to accelerate roll-out, and/or new technologies, in its own bands or Sprint's.
• Hesse said at the briefing: "It's no question there's a slowdown", referring to Clearwire's roll-out pace and its financing issues. He reiterated that issues of the speed of 4G roll-out would be addressed at an unspecified date in the autumn and said it was "an issue of economics" why Sprint did not acquire the rest of Clearwire and reassert control over its build-out. Sprint is unwilling to damage its own balance sheet with Clearwire's debt and cash burn.

Editors Note: It’s interesting to note that with all of the press coverage of the Clearwire acquisition that ultimately, it did not turn out the way that Sprint wanted. As mentioned in this snapshot, it is the view of the analyst that Clearwire’s financial position has lead to a delay in Sprint’s roll-out of 4G.