Sprint Nextel (S), the third-largest U.S. wireless carrier, has collaborated with smart grid software provider, Grid Net, to connect smart meters and smart grid routers using its 4G network.
Sprint is the first and only national wireless carrier to launch 4G network in the U.S. The company offers speedy data services to customers via 4G WiMax (a wireless broadband technology) network in collaboration with Clearwire Corp. (CLWR). WiMax provides an affordable and safe solution for the wireless connection of smart meters to the Smart Grid.
Grid Net currently has customers using WiMax in the Australian market. The deal with Sprint allows WiMax penetration in the U.S. market. It also makes Sprint the first national wireless carrier to embed WiMax connectivity into smart meters and routers and combine them on a 4G network.
The deployment of Sprint's 4G WiMax offers a major prospect in the wireless market and may boost the company's revenues. Currently, Sprint extends its 4G network in 49 cities with the Clearwire network. This reach keeps the company well ahead of its rivals AT&T Inc. (T) and Verizon Communications Inc. (VZ). AT&T plans to roll out its 4G services in 2011 and Verizon plans to launch 4G services in 25–30 markets in the fourth quarter of 2010.
Sprint is well positioned to leverage the growing wireless smartphone market in the U.S. with its rich portfolio of popular smartphone offerings and advanced devices in the pipeline.
However, we believe a lower margin-revenue mix, expenditures related to wide-scale 4G service deployments and weak wireless business may impact financials over the near term. Moreover, Sprint Nextel's prepaid business is expected to face further challenges from the aggressive rollout of competitive price plans in the balance of 2010.
We are currently recommending our Neutral rating on Sprint supported by a Zacks #3 (Hold) Rank.
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