Sprint Corporation (S) has reportedly announced plans to shut down its WiMAX service, effective Nov 6, 2015. The company intends to shut down 6,000 cell sites by 2015 end and expects to incur a cost of around $50–$100 million on tower shutdowns.
We believe while the discontinuation of old services will create opportunities for adding the latest technology and services under the company’s portfolio, cost incurred thereon is likely to hurt margins over the near term.
The WiMAX network closure follows that of the iDEN Nextel network that Sprint had carried last year. The company is currently focused on deploying LTE service on the 800 MHz spectrum, now free post the iDEN network shutdown.
Sprint set up WiMAX in around 17,000 cell sites and was engaged in the process of deploying TD-LTE technology in around 5,000 of these sites, work for which is now complete. While the company plans to close WiMAX, it is committed to its growth plans for TD-LTE deployment in around 5,000 additional sites. This is in sync with Sprint’s Spark tri-band LTE service expansion agenda.
According to reports, Sprint plans to extend Spark to 100 million POPs by the end of this year and to roughly 100 markets by 2016 , gaining an edge over other rivals like AT&T, Inc. (T)
Sprint’s core platform business is dependent on the success of its multi-billion dollar restructuring program known as Network Vision. Through this plan, the company is concentrating on the core Sprint platform, which includes the CDMA and LTE technologies that led to the eventual termination of the Nextel platform (iDEN business) in Jun 2013. The company began the deployment of CDMA voice on 800 MHz in early 2013 and now has sites on air at approximately two-thirds of its markets. In addition, over 40% of its post-paid base has 800 MHz voice capable devices. Further, the company plans to deploy 8T8R equipment on its existing network by mid 2014.
Sprint currently has a Zacks Rank #3 (Hold).
Other Stocks
Chunghwa Telecom Co., Ltd. (CHT) and Verizon Communications Inc. (VZ) are two stocks worth considering in this sector, both with a Zacks Rank #2 (Buy).
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