Analysts can’t stop peeing on Sprint’s (S) rollout of its next-generation wireless network.
The new WiMax network will be run by $14.5 billion ISP Clearwire (CLWR), of which Sprint will maintain a 51% controlling stake. Google (GOOG), Comcast (CMCSA), Intel (INTC), and Time Warner (TWX) have also invested substantial sums in the entity. Scheduled for rollout in 2010, the network will reach between 120 and 140 million customers upon completion.
Next-generation wireless networking is a big business, and lots of companies across a broad range of sectors stand to profit from the deal. Citi and Lehman commentary summarized below:
Citi hates the deal, cutting CLWR to Sell and maintaining a Hold on S:
We believe some of the same challenges remain for the combined businesses with respect to a coverage plan that reaches less than half of the U.S. population by ’10, an unclear path to dual-mode devices to leverage Sprint’s CDMA coverage, an under-funded busines plan, existing mobile broadband competition that will likely launch a nat’l LTE footprint in the 2010-11 timeframe, & a business plan that may create channel conflict b/t the J/V owners.
Lehman hates it, too, at least for Sprint:
…we do not see any fundamental upside to S shares as a result of this announcement. Given the recent increase in Sprint’s shares – up 63% since their lows this year on March 19th (vs. SPX up 9%) – we’re cautious heading into Sprint’s 1Q08 release on May 12th.
While Lehman is sceptical about upside for Sprint, it views Google’s position differently:
We believe Google’s $500m investment for a 3.4% stake in Clearwire is relatively small given the potential for Google to become a direct contributor to the build out of a next-gen mobile boradband network. We believe that Google is the largest online beneficiary of increased mobile Internet penetration as users are likely to extend thair current online habits to the mobile Internet. thereby driving incremental usage of Google search and other applications.