Optical/IP Networks

Verizon Is Eating Sprint's 4G Lunch

Clearwire LLC (Nasdaq: CLWR) gave a sneak peak of its fourth-quarter results on Tuesday, including that it added 900,000 4G wholesale customers, down from 1.9 million in the previous quarter and 1.5 million in the second quarter. (See Clearwire Ends 2012 With 10.4M Subs.)

It wasn't all bad news for Clearwire, however, as it doubled its revenue to $362 million up from $181 million last year, beating analyst expectations. But, the decline in subscribers could be a reflection of stalled 4G WiMax sales over at its majority owner, Sprint Corp. (NYSE: S), which launched the iPhone in October. By contrast, Verizon Wireless sold over 2.4 million 4G Long Term Evolution (LTE) devices in the quarter and said it will have 24 LTE devices available in the first quarter of 2012, up from 18 now. Verizon also sold over 4 million of the Apple Inc. (Nasdaq: AAPL) device in the quarter. (See VZ iPhone Boosts Data, Shaves Margins in Q4.)

Why this matters
Sprint gave Clearwire the cash injection it needed to stay afloat last month, but it may have been distracted from selling its Android 4G phones by its iPhone investment and plans to build out LTE. While it's committed to using Clearwire's WiMax network until 2015, the network will eventually be supplanted by LTE. (See Sprint Keeps Clearwire (& Unlimited) Alive.)

The problem for Sprint is that it's at a significant disadvantage on its LTE network too. Verizon already reaches 195 markets in the U.S. and will match its 3G footprint by mid-2013, while AT&T Inc. (NYSE: T) has 26 markets deployed and a nationwide High-Speed Packet Access-Plus (HSPA+) network to fall back on. Sprint plans to launch just 10 LTE markets by mid-year. (See Verizon Plots 5 New LTE Markets, AT&T Promises Superfast 'Blended 4G' and Sprint's First 10 LTE Markets Coming by Mid-Year.)

Sprint may also need upwards of $3 billion to complete its LTE rollout, adding to its 4G challenges. The carrier reports its fourth-quarter earnings on Feb. 8. (See Sprint Needs $3B to Fufill Its 'Network Vision'.)

For more
See the latest on Sprint's Network Vision below.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

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