Sprint Unveils Third 4G Smartphone - Analyst Blog

Sprint Nextel (S), the third-largest U.S. wireless carrier, unveiled its third 4G handset “HTC EVO Shift 4G”, which will be available in markets on January 9. The handset is priced at $149.99 after a $100 rebate and carries a two-year contract.

The device “HTC EVO Shift 4G” runs on the latest version of Google's (GOOG) Android operating system. The launch follows the first 4G handset “EVO 4G” in early June 2010 and the second 4G “Samsung Epic 4G” in late June. Both the smartphones are performing well in the U.S. market and is ahead of the iPhone, offered by AT&T Inc. (T) or any other Android device. These smartphones are expected to fuel Sprint's earnings and margins going forward.

Expansion of 4G services is vital to Sprint'ssurvival in the U.S. wireless market given its continued market share erosion. Sprint continues to widen the market coverage of its 4G WiMax network in collaboration with Clearwire (CLWR). It has been a trailblazer in 4G having leapfrogged over its larger U.S. peers, VerizonCommunication (VZ) and AT&T by becoming the first carrier to deploy 4G services in the country with commercial service launched in Baltimore in October 2008.

Sprint provides its 4G network in 71 U.S. markets via Clearwirenetwork and covers approximately 120 million people. AT&T plans to roll out its 4G services in mid 2011 and Verizon currently covers 39 markets and around 110 million people.

In addition to the EVO Shift, Sprint also announced a new Novatel MiFi 3G/4G mobile hotspot device, which provides wireless connectivity for up to five WiFi-enabled devices. The company is expected to launch the device on February 27 for $49.99 after a $50 rebate with a two-year contract.

Sprint's 4G WiMax is a major opportunity in the wireless market, which may drive future revenue for the company. Sprint is well positioned to leverage the growing wireless smartphone market in the U.S. with its rich portfolio of popular smartphone offerings and more advanced devices in the pipeline. We believe an attractive wireless product/service mix, expanding 4G network footprint, new Virgin Mobile “Beyond Talk” data-centric plans and the Boost Mobile prepaid business will continue to add opportunities in the wireless business.

However, we remain on the sidelines due to sustained declines in the wireless customer base, heavy expenditure involved in deploying 4G services, competitive threats as well as the rollout of competitive price plans by its rivals.

Consequently, we are currently reiterating our long-term Neutral rating on Sprint supported by the Zacks #3 (Hold) Rank.

 
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