Sprint Nextel to Spend $3 Billion on WiMax High-Speed Network

Strategic Insights -

Sprint Nextel Corp. is preparing to launch a groundbreaking high-speed wireless network, dubbed "4G," which will connect the internet with mobile phones, gaming consoles, and other consumer electronics devices. The Reston-based company, the nation's third-largest mobile-phone service provider, will team up with Intel Corp., Motorola Inc., and Samsung Electronics Co. to develop the WiMax technology, which will enable fast and convenient wireless internet access across entire cities. According to Sprint Nextel's president and CEO, Gary Forsee, the company will invest $1 billion in 2007 and between $1.5 billion and $2 billion in 2008 to build the new network.

Key Takeaways:

  • The $3 billion investment will be spent over the next two years to build a new high-speed wireless network using WiMax technology.
  • The network will link the internet with mobile phones, gaming consoles, DVD players, and other consumer electronic devices.
  • The technology will provide entire cities with wireless internet access, unlike short-range WiFi that requires users to be near a wired "hot spot."
  • The network will debut in trial markets by the end of 2008 and will be deployed across the country, reaching up to 100 million people.
  • The WiMax network will use Sprint Nextel's high-frequency radio spectrum holdings, which cover 85 percent of households in the top 100 US markets.
  • The partnership involves Intel Corp. making WiMax chips, Motorola Inc. and Samsung Electronics Co. supplying mobile devices and equipment, and Sprint Nextel providing the infrastructure.
  • Analysts have expressed mixed opinions on consumer demand for the new network, with some praising its potential and others questioning its feasibility.
  • Sprint Nextel's shares closed down 31 cents at $16.63 on the New York Stock Exchange on the same day.

Statistics:

  • $1 billion to be spent in 2007
  • Between $1.5 billion and $2 billion to be spent in 2008
  • Network to be deployed across the country, reaching up to 100 million people
  • 85 percent of households in the top 100 US markets covered by Sprint Nextel's high-frequency radio spectrum holdings
  • 49 billion market cap of Sprint Nextel
  • 31 cents decrease in shares on the New York Stock Exchange on the same day

Sources:

  • "Sprint to unveil WiMax network," THE WASHINGTON TIMES (no date provided)
  • http://www.sprint.com (no date provided)
  • http://www.intel.com (no date provided)
  • http://www.motorola.com (no date provided)
  • http://www.samsung.com (no date provided)
  • http://www.matrixusa.com (no date provided)
  • http://www.stifelnicolaus.com (no date provided)