This is the message that Sprint has been shouting since it introduced Network Vision last year in order to assure investors that the multibillion-dollar investment in Long Term Evolution (LTE) and multimode base stations is worth the wait. And, after spending time at Sprint's analyst day at its Overland Park headquarters last month, TBR analyst Scott Dennehy believes the strategy will pay off. (See Sprint Accelerates Network Vision.)
"The operator has been attempting to dig itself out of a financial hole for years and will finally begin to see the impact of the Network Vision strategy in 2014 through revenue growth and cost reduction," Dennehy wrote in a research note. "This will drastically improve Sprint’s margins, which were the lowest in the industry in 1Q12."
Sprint's now in phase two of Network Vision, the investment phase, with its first five LTE market launches planned for July 15. Dennehy believes that once the 4G network is widely deployed, it will drive more data usage for Sprint, which, in turn, will bring "tremendous cost-savings and an increase in revenue growth." (See Sprint Sets LTE Launch Date .)
By 2014, Sprint's legacy iDEN network will also be completely shut down, simplifying its network operations. (See Sprint's iDEN Will Be iDONE in June 2013.)
"Sprint will save money by not having to operate another network, by reducing energy consumption of iDEN equipment, and will also save on cell site space," Dennehy says, adding that employee reductions will also cut expenses.
Why this matters
Sprint is counting on its Network Vision initiative to reduce its total costs by $10 to $11 billion by 2017, but it's costing the operator billions of dollars to implement it. It's also costing Sprint time. Verizon Wireless already covers 304 markets with LTE, while AT&T Inc. (NYSE: T) reaches 41 towns and cities. Sprint's planning to reach 250 million PoPs by the end of 2013, up from its five markets this month, but it will still be playing catch-up for many years to come.
- Sprint & Vendors Lagging on LTE Build?
- Sprint LTE Devices Arrive Before Network
- Sprint's 4G LTE Texan Triangle
- Verizon Is Eating Sprint's 4G Lunch
- Sprint Needs $3B to Fufill Its 'Network Vision'