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LTE iPhone could bankrupt Sprint

Posted: , by Victor H.

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LTE iPhone could bankrupt Sprint
Dreaming about an LTE iPhone? You’ve got the right to - Verizon has said it won’t sell any non-4G smartphones this year and AT&T is rolling out and expanding its LTE network. Apple also dropped an LTE-capable third iPad, so all logical clues point to a 4G LTE iPhone in tow.

But while this sounds good for most users, it could turn into a disaster for Sprint, the nation’s third-largest carrier. Sprint signed a 4-year deal with Apple putting the mobile operator deep into the red - it requires Sprint to pay $15 billion over that period for the iPhone.

CEO Dan Hesse argued that the iPhone is the number one reason Sprint is losing subscribers and some relief came after the first quarter of iPhone sales showed slight improvement for the carrier. An LTE iPhone could quickly reverse that momentum back to AT&T and Verizon since the big two have or will have relatively well developer LTE networks by the time the new iPhone launches, while for Sprint the future is murky.

Bernstein Research analyst Craig Moffett yesterday downgraded Sprint’s share rating to “underperform” exactly on fears over an LTE iPhone.

“We believe an LTE iPhone will likely be badly disadvantaged on Sprint’s network, potentially impairing sales … at a time when Sprint is subject to a punishing take-or-pay deal with Apple. The problem is 4G. Sprint doesn’t have enough free-and-clear spectrum on which to launch a competitive LTE network, and it doesn’t have the money to clear spectrum that’s already in use,” Moffett wrote to clients. 

Simply put, Sprint’s LTE network effort is too little, too late and subscribers could flock to Verizon and AT&T.

There are two possible outcomes. The first one includes Sprint pulling its act together, putting ClearWire back on its feet and growing a stable and big enough 4G LTE network.

The second outcome is what the analyst fears could happen if Sprint fails to go on the LTE track quick enough - decline in sales and eventually bankruptcy. It’s far from being inevitable, but the risks are growing, according to the analyst.

Which scenario you think is most likely to happen? Why? Let us know in the comments below.

source: AllThingsD

56 Comments
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posted on 20 Mar 2012, 04:06 14

1. nyamo (Posts: 274; Member since: 19 Mar 2011)


with sprint it always seems too little too late. they had to know about LTE when they deployed wimax. why bother going with an industry standard.... every time sprint makes a busniess decision they make the exact opposite of what should be done. i feel if they plan to continue business in the future they need an over haul from the top down and get somebody in there with leadership and a clear path

posted on 20 Mar 2012, 08:37 12

15. cellgeek82 (Posts: 518; Member since: 20 Dec 2009)


Agreed. Sprint likes being the odd ball. This is why they're on a downward spiral. They wanted WiMax while the rest of the world, yes the whole world adopted LTE.

If Sprint were stranded in the desert they'd beg for more sand while everyone else ran to the oasis.

posted on 20 Mar 2012, 08:50 10

16. Fallout09 (Posts: 421; Member since: 17 Oct 2011)


Check your facts bud... Sprint didn’t have a choice with WiMAX. Why is it so hard to understand that it was a "USE IT OR LOSE IT" situation with some spectrum agreements? LTE simply wasn’t ready nor available to roll

posted on 20 Mar 2012, 08:53 1

17. darkkjedii (Posts: 22033; Member since: 05 Feb 2011)


That last part was funny man lmao!

posted on 20 Mar 2012, 10:14 10

23. rallyguy (Posts: 620; Member since: 13 Mar 2012)


Sprint launched Wimax 4G in 2008. AT&T is just rolling it out in 2012, and Verizon started in 2011 or 2010.

It's ignorant to say Sprint went with Wimax when everyone else was going to LTE.

LTE was not heard of when Sprint launched 4G years ago.

posted on 20 Mar 2012, 10:35 10

28. tedkord (Posts: 12217; Member since: 17 Jun 2009)


That's a silly statement. Do you think these technologies just appear suddenly one day?

LTE was first proposed in 2004, with development beginning in 2005. Sprint, and all carriers, certainly knew about LTE,

Since it was a natural, obvious upgrade path for GSM carriers, it was fairly certain it would be widespread.

Now, CDMA carriers like Sprint and Verizon had a more difficult decision. since it wasn't such a natural path for them, but they both knew the world would most likely be heading down the LTE path, and that it would be a well developed tech.

It wasn't ready when Sprint launched WiMAX, that's true. Sprint made the poor decision to go with an orphaned tech just so they could claim they were first with 4G (which they weren't - no one has true 4G yet). Yes, they had to either act or lose it, but in hindsight they'd probably be better just losing it, and investing in LTE for their network. They wouldn't be first, but their "firsts" haven't been all that impressive - WiMAX, 3d display, dual display...

Sprin't most impressive attribute right now isn't a first, it's a last - they're thre last major carrier to drop true unlimited data. I hope they tough it out for a long time to come, and keep the other carriers more honest.

posted on 20 Mar 2012, 10:59 8

32. remixfa (Posts: 14255; Member since: 19 Dec 2008)


Wimax was far from orphaned when sprint went with it. At the time there was an expected "battle" between wimax and LTE. The federal government had also proposed a bill to build wimax coverage for all major cities so everyone could have "free internet" pretty much anywhere. Then the markets collapsed and that bill went bye-bye. Had the markets not collapsed, sprint would be sitting in a much healthier position with their wimax as it would have been compatible with all those free government towers. They rolled the dice, and lost.
Also, they wanted to be first out the gate with one of the 2 new 4g technologies. Since LTE was still in baby trial stages, Wimax was the only option.

Honestly, sprint has made a lot of bad chance decisions over the years. They are operating too many incompatible networks at the same time which costs a lot of extra money. They made the deal with the devil with the iphone that cost too much money.

If I were in charge, i never would have made that mega deal with apple. I would have instead made deals with every other OS manufacturer to make sure I got the best phones that were coming out, and getting them first. It would have cost some $$, but it would have been a hell of a lot less than they gave to apple. They could have built their own LTE network with that money....
That and turn off iDen and all the other BS thats costing them cash.

posted on 20 Mar 2012, 11:57 2

41. jamrockjones (Posts: 345; Member since: 26 Oct 2011)


I agree, Apple is the devil.

posted on 20 Mar 2012, 12:20 2

42. TOYMAN (Posts: 29; Member since: 23 Feb 2012)


IDEN will be done in 2013

posted on 20 Mar 2012, 13:05 2

43. remixfa (Posts: 14255; Member since: 19 Dec 2008)


yea, they announced that like 2 years ago. Thats a long time. Give the people 90 days to get a free upgrade to a similar phone on non-iden, and shut the darn thing off.

posted on 20 Mar 2012, 11:01 3

34. ngo2dd (Posts: 896; Member since: 08 Jul 2011)


Knowing about and being ready is different. Why do people feel that WiMax itself is so inferior. WiMax been in use for japan for a couple years now. They have WiMax 2.0 ready to go. The tech is not bad it was clearwire fault for just being s**tty

posted on 20 Mar 2012, 23:53

55. droidguy2323 (Posts: 55; Member since: 23 Sep 2011)


LMFAO

posted on 20 Mar 2012, 10:36 2

29. Commentator (Posts: 3709; Member since: 16 Aug 2011)


For what it's worth, several current iPhone users I've talked to (who use AT&T) are switching to Sprint when the next one comes out, simply because they have the lowest prices. These are all broke college students, though, so, as PA would say, "take this with a grain of salt."

posted on 20 Mar 2012, 05:25 14

2. Slammer (Posts: 1515; Member since: 03 Jun 2010)


The relationship between Sprint and Clearwire is very dysfunctional. Ok, I understand the reasoning behind the WiMAX initiative. It was either allocate and use the spectrum before given date or forfeit the licenses. WiMAX was a ready technology. LTE was no where near ready. So Sprint made the right decision no matter how people look at it.

However, With WiMAX up and running, Sprint and Clearwire should've remained as strong allies as possible. The massive spectrum holdings of Clearwire, is the notch that Sprint needs to compliment their own holdings. Sprint needs to focus on coddling Clearwire. This is the epitome of importance. They have squandered time and efforts over bickering rather than building what could be the fastest and most rubust 4G network around.

This is where the rubber meets the pavement. Sprint and Clearwire must forge ahead and take control. Stop acting as children and set the differences aside. Let's get this network rolling and prove that working together is better than feuding.

John B.

posted on 20 Mar 2012, 11:52 5

39. Tux4g63 (Posts: 118; Member since: 21 Oct 2011)


Slammer for President

posted on 20 Mar 2012, 18:26 5

48. Non_Sequitur (Posts: 1111; Member since: 16 Mar 2012)


I BELIEVE IN SLAMMERCARE.

YES
WE
CAN

posted on 20 Mar 2012, 05:42 6

3. darktranquillity (Posts: 284; Member since: 28 Feb 2012)


I thought apple could make only individuals bankrupt with its overpriced craps. alas! I'm wrong:-(

posted on 20 Mar 2012, 06:26 3

4. Bluesky02 (Posts: 1439; Member since: 05 Dec 2011)


Every news i hear about sprint come to same conclusion
Sprint Shoot Itself

posted on 20 Mar 2012, 07:41 6

7. theday68 (Posts: 2; Member since: 20 Mar 2012)


There's always more demand than supply for a new iPhone model, so call me crazy, but I'm pretty sure that Sprint is going to sell plenty of them regardless.

Aside fromt that, why is it that if a company isn't number one or competeing for number one as far as sales/subscribers/revenue, ets. that they are considered 'doomed'? Yes, Sprint is having a bit of a financial disaster, but that hasn't seemed to stop dozens of other companies over the last few years, has it?

On a side note, I can't wait to use Verizon or AT&T's blazing LTE service so I can zip my way to my data limit in less than half the time!

posted on 20 Mar 2012, 08:09 6

11. QWIKSTRIKE (Posts: 1173; Member since: 09 Mar 2010)


Sprint will have LTE running in NYC, Westchester up to Dutchess County, some parts of LI, California, Alexandria Virginia DC- Baltimore corridor, Boston, Northern New Jersey. Atlanta, areas in Texas, areas of Florida, and other various areas that I don't recall by June through the years end. I look forward to a possible June August launch in NYC. Some of you impatient Sprint people leaving will regret it. Network vision has been very busy. Do your research before bailing and paying higher fees.

GN will be released in April, and possibly the LG Viper and HTC ONE X. You have waited this long, and a few more months won't hurt. Sprint has a few tricks yet unshown I think. Look before you leap is a phrase that comes to mind.

posted on 20 Mar 2012, 20:32 1

51. lsutigers (Posts: 820; Member since: 08 Mar 2009)


ALL TRUE PEOPLE...Sprint in in a tough situation right now because they are spending A LOT of money. However, they are doing so to become a much more efficient company and to remain competitive in the market. At some point, as capacity load increases and technology ages and changes all carriers will have to modernize and consolidate their networks, Sprint is choosing to do it now, for many reasons including the much needed decomissioning of iDEN. This is Network Vision with LTE deployment. Sprint will survive, in the meantime, we will likely continue hear these stories until we make it to the other side of the tunnel. There is light at the end of the tunnel. LTE network is being built rapidly, voice and 3G are being upgraded, essentially, Sprint is doing what no other wireless carrier has done, rebuild their network, essentially from scratch. Once Network Vision and LTE deployment is complete, Sprint will have an awesome network and will hopefully continue to offer unlimited data. Sprint is making a very significant LONG TERM investment to remain competitive for many years to come.

Check out www.s4gru.com for Sprint Network Vision / 4G LTE deployment news and you will feel much better about Sprint's plans.

posted on 20 Mar 2012, 08:55 3

18. Fallout09 (Posts: 421; Member since: 17 Oct 2011)


Finally, someone who sees Verizon and AT&T LTE data plans the same as me. "I can't wait to use Verizon or AT&T's blazing LTE service so I can zip my way to my data limit in less than half the time!"

posted on 20 Mar 2012, 11:54 1

40. Tux4g63 (Posts: 118; Member since: 21 Oct 2011)


The only reason I am still on my Verizon contract is grandfathered unlimited data

posted on 20 Mar 2012, 10:42

30. tedkord (Posts: 12217; Member since: 17 Jun 2009)


It doesn't matter how many iPhones Sprint sells, as they are a money loser for them. Sprint's losses reached a three year high after offering the iPhone for the first time, even though they added subscribers.

Sprint is considered doomed because they've been posting a quarterly loss every single quarter forever. And, it got worse with the iPhone, because it's such a heavily subsidized phone. Sprint could have more subs than anyone else, but if they keep losing money, they're doomed. It's not a case of competing for first or second, it's a case of bleeding cash constatnly - eventually any company will reach the point where they can't secure any more loans because they owe so much without profits to pay it off.

I for one hope Sprint doesn't die. I want them offereing value so the other carriers have a check on their prices/practices.

posted on 20 Mar 2012, 11:04

35. ngo2dd (Posts: 896; Member since: 08 Jul 2011)


They also was able to gain customer. They gain user in Q4. So in the long run that is what they are looking at, they will make money. That is the problem is everyone look at short theme gain and not long time theme.

posted on 20 Mar 2012, 07:50

8. JunitoNH (Posts: 1895; Member since: 15 Feb 2012)


Here's the third outcome, and everyone just trying to go around it. Verizon eventually is going to absorb Sprint. Here to the stupid company, who purchased Nextel.

posted on 20 Mar 2012, 08:07 3

10. arcq12 (Posts: 733; Member since: 13 Oct 2011)


I don't think VZW will buy Sprint. Who would've want to buy a company who's 6-Ft. under its debt? lol

posted on 20 Mar 2012, 15:45

46. jbash (Posts: 345; Member since: 07 Feb 2011)


wont happen fcc already ruled that verizon was at max capacity after the alltell merger and had to sell off some of the marketshare it gained from alltel. if it bought sprint it would gain only its sprectrum and sell its subscriber base off to smaller companies like metropcs, us cellular, cricket, ntelos, etc

posted on 20 Mar 2012, 07:53 3

9. _PHug_ (Posts: 444; Member since: 11 Oct 2011)


WHAT?
15 Billion over 4 years for the s**tty iPhone?!
They deserve to go bankrupt.

What they should have done was allowed people with a Verizon iPhone to activate it on Sprint's service and offer to pay the early termination fee if they switch to Sprint unlimited.

Verizon and Sprint use the same bands and it would have been alot cheaper than dealing through Apple directly.

As a matter of fact they could have offered existing customers a subsidized Verizon iPhone to not switch and resign a 2 year contract. Again WAY cheaper than paying Apple and keeping customers.

posted on 20 Mar 2012, 08:10 4

12. arcq12 (Posts: 733; Member since: 13 Oct 2011)


I know that the iPhone is a sh*tty phone but its a business strategy you dumba$$.. That sh*tty phone has been selling awesome since the first iPhone. Who wouldn't want that?

And guess what? Verizon iPhones can't be activated on Sprint and vice-versa. So that being said, you don't make no sense.

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