Sprint Nextel has made its call on the future of its wireless business, and it’s going to be a brand new LTE network. They say they are already building, and will have the first markets online by the middle of next year with 123 million in population covered by the end of 2013 and 250 million by the end of 2013. They say their current spectrum will get them that far, and the deal with LightSquared will help them at the next stage – assuming they make it out of GPS hell of course.
While Sprint says it will of course continue to support Wimax customers through Clearwire, this obviously will do serious damage to Clearwire’s current business plan – which was already hanging by a thread. Clearwire has plans to do LTE also, however it would need funding to actually roll it out and Sprint was the likeliest source of that funding.
As Sprint is Clearwire’s main wholesale customer and will be de-emphasizing the product in about a year, what can they do? Restart their retail operations? That wouldn’t exactly help ebitda to go positive, which is their current focus.
But since Sprint owns half of Clearwire, this move is a bit like chewing off one’s own arm. You have to figure there’s another shoe to drop yet this fall. Clearwire has so much spectrum, you have to figure Sprint will look to reclaim it somehow. I still think that the eventual result here has to be a combination of the Sprint, Clearwire, and LightSquared efforts.
Sprint’s buildout of LTE will be costly, and they will be raising money to make it happen. I wonder what that means for their wireline business, whose capex hit a new low last quarter. Might they choose to monetize it this winter? Hmmmm…
This article was authored by Rob Powell and was originally posted on Telecomramblings.com
Rob Powell is founder & editor of Telecom Ramblings, which was set up in 2008. The website is dedicated to discussing trends and developments in the telecom industry