Scoop: Sprint to confirm LightSquared network deal
The network-sharing deal is one element of Sprint's major 4G push, CNET has learned. Sprint's network will be used as the infrastructure backbone to LightSquared's upcoming 4G LTE network.
Sprint Nextel will confirm its network-sharing agreement with LightSquared in conjunction with its earnings announcement on July 28, according to people familiar with the situation.
The agreement, in which Sprint's network will be used as the infrastructure backbone to LightSquared's upcoming 4G Long-Term Evolution network, will shed some light on where Sprint wants to head with its own 4G ambitions. The company was supposed to have provided an update on plans for its next-generation network by the middle of the year, but has pushed back its announcement.
While Sprint came on to the 4G scene early with partner Clearwire and their 4G WiMax network, the company has more recently expressed a desire to cement its own independent plans. The company already has its Network Vision plan, a major overhaul of its network that allows it to use multiple wireless technologies at once.
Sprint's potential strategy shift comes as its competitors all step up their game. Verizon Wireless willwith its 4G LTE by next week. AT&T and T-Mobile have been rapidly expanding their HSPA+ wireless networks, which they argue is faster than WiMax in some places. In addition, AT&T plans to launch its LTE network in five markets this summer.
Sprint and Clearwire bet early on WiMax, which paid off with a strong turnaround in customer growth for Sprint. But Clearwire's network rollout has stalled due to financing issues, and despite a head start, only has 71 markets covered. With the wireless industry increasingly moving to LTE as a unified standard, Sprint has been looking in that direction as well.
The company is spending $4 billion to $5 billion over the next three to five years on the upgrade, and is expected to save between $10 billion and $11 billion over a seven-year period as a result of the more efficient equipment. The work is slated to begin in the second half of the year.
Sprint's ability to handle multiple wireless technologies allows it to offer up its infrastructure to the likes of LightSquared. The start-up, owned by Philip Falcone's Harbinger Capital, has been struggling to get its network up and running amid. It plans to test out the network sometime next year.
Harbinger hasn't been silent on a deal. The hedge fund sent a letter to its investors boasting of a 15-year agreement with Sprint. Sprint hasn't acknowledged the deal.
The agreement is one element of Sprint's larger 4G plan. While investors have been concerned that a deal could push Clearwire out of the picture, it's unlikely that will happen. Sprint owns a 54 percent stake in the company. In April, Sprint signed a deal that wouldover the next two years to use its next-generation network. Clearwire itself has been testing the use of LTE in addition to its existing WiMax deployment.
The Network Vision plan, meanwhile, could allow Sprint to strike similar network-sharing deals with other potential partners. J.P. Morgan analyst Philip Cusick said in a note today that Sprint could turn to the cable companies, which own a valuable swath of spectrum, as potential 4G partners. The analyst was quick to note, however, that none of these companies has talked about this scenario.
Whatever Sprint ends up doing, it will have to raise its game quickly in the face of some scary competition.