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Alex Cho

Sprint Doesn't Need to Spend as much as Verizon and AT&T to Keep Up

Sprint continues to accelerate its network deployment strategy. And while it’s difficult to articulate how that translates into subscriber retention, the early indications show that churn is continuing to trend lower.

Furthermore, Sprint went into more detail on its network deployment strategy at a UBS conference, here were some of the highlights:

While the carrier has highlighted the benefits of beamforming and carrier aggregation before (~55% of devices will be on 3 channel carrier aggregation by YE2017, offering test speeds of 200 Mbps+), HPUE (high performance user equipment) is a new standard added to its tool kit. HPUE essentially boosts the cell edge and in-building coverage of 2.5GHz, nearly replicating the coverage of 1.9GHz spectrum. Since this technology centers around the device itself, there is limited capex required to roll this out (which will occur starting with handsets early next year). HPUE is a TDD-LTE technology.

Given the details shared by Sprint at its recent conference, the development of LTE Advanced is certainly exciting, as many of Qualcomm’s more recent modems are capable of carrier aggregation. But, basically, the usage of carrier aggregation technology isn’t actually all that CAPEX intensive, as it’s the next stage of LTE, in which Sprint can leverage its separate spectrum bands at 800 MHz, 1,900 MHz PCS and 2,500 MHz and sort of squeeze data channels into the three spectrums via what’s known as 3 carrier aggregation.

The impact from moving data through 3 different spectrum bands is expected to improve data packet processing/bandwidth via its pre-existing base station footprint as Sprint continues to transition its base stations towards Samsung’s latest Radio Units, which are capable of 5 channel carrier aggregation.

UBS estimates that Sprint’s expenses will increase:

The company is working to deploy more of its 2.5 GHz spectrum (only 25-30% of total spectrum holdings are in use now carrying 40% of the LTE traffic). Network capex will be higher next fiscal year (UBSe $4.7B for FY17 vs. $3B projected for FY16) as this effort continues. Current investments will provide a bridge to 5G, which mgmt. believes it would be deployed sub-3GHz band for mobility.

The bang for the buck from these new technologies favor Sprint, as Sprint is war more efficient on CapEx and can still provide serviceable data speeds for the bulk of its users. This should translate favorably in the long-run.

Contrary to popular belief, Sprint doesn’t need to spend as much as Verizon and AT&T to maintain its current subscriber base.

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