Sprint Nextel's deployment of its ambitious Network Vision infrastructure, which includes the gradual rollout of 4G LTE technology, is about three months behind schedule due to several factors, the company said during its financial results call on Thursday.
Network Vision is an infrastructure that allows Sprint to run multiple network technologies and host multiple spectrum bands at the same set of sites. As it's deployed, Sprint is installing LTE as well as upgrading its 3G CDMA system, while phasing out the narrowband iDEN network originally used by Nextel. Sprint had said it expected the Network Vision deployment to reach 12,000 cell sites this year.
"While we're encouraged by the momentum of the project, we have been seeing some delays from our vendors, largely related to logistics execution and material shortages as well as some delays related to the hurricanes in the third quarter. And now, we believe, we're approximately one quarter behind in hitting the 12,000 target," said Steven Elfman, president of network operations and wholesale, on a conference call with financial analysts.
However, he said the delay "has not meaningfully delayed" Sprint's forecast for the overall project's timing or cost. Sprint expects Network Vision to be largely complete by the end of next year.
Sprint lags behind the two largest U.S. operators, Verizon Wireless and AT&T, in LTE deployment. It offers LTE in 32 cities, while Verizon has it in more than 400 cities and AT&T expects to reach 100 cities by the end of this year. On the call, CEO Dan Hesse acknowledged a disadvantage on LTE availability versus bigger rivals but said: "Our network position, we believe, is temporary and we plan to catch up." Sprint said recently it would roll out LTE in 115 more markets in the coming months, without being more specific.
The planned majority investment in Sprint by Japan's Softbank, announced earlier this month and still awaiting shareholder and regulatory approval, should help the carrier gain the scale to better compete, Hesse said. He said Sprint's smaller scale caused it to be late to LTE and to offering Apple's iPhone and iPad.
"We've constantly been playing catch-up. We are good at playing catch-up, we close the gap very quickly, but we believe with additional financial resources that we can do that much more effectively," he said. Hesse declined to comment on Sprint's partnership with Clearwire, which supplies its current WiMax service and is intended to be part of its LTE offering, other than to cite the companies' current arrangements and say they continue to work together.
Sprint lost US$767 million in the third quarter ended Sept. 30, wider than its $301 million loss in last year's third quarter. But total revenue was up 5 percent to $8.76 billion. The company said wireless services revenue grew 14 percent to almost $7.3 billion.
The carrier posted a net gain of about 900,000 subscribers on its Sprint platform, reaching nearly 53 million prepaid and postpaid customers. The Nextel platform, which Sprint expects to phase out by the middle of next year, lost about 866,000 subscribers. But Sprint said it has been successful at drawing the former Nextel customers to its platform. In the third quarter, 59 percent of the postpaid subscribers leaving Nextel became Sprint customers, the company said.
Sprint is focusing most of its marketing efforts on recapturing Nextel subscribers and doesn't foresee any upcoming changes in its rate plans, Hesse said.