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Sprint Chases EV-DO?
06.18.04

Sprint Wireless (NYSE: PCS - message board) is considering a surprise $800 million CDMA 1x EV-DO (Evolution, Data Only) network rollout that will play into the hands of domestic infrastructure vendors, according to various analyst sources.

“We believe Sprint will deploy CDMA 1x EV-DO beginning in the fourth quarter of 2004, at a cost of $0.8-1 billion,” notes UBS analyst Nikos Theodosopoulos.

“Our checks indicate that Sprint PCS could be gearing up to announce CDMA 2000 EV-DO contract awards soon,” adds a Merrill Lynch & Co. Inc. research note. The financial firm estimates a slightly lower capital expenditure, forecasting “$600-$800 million over 2 years.”

This upgrade from Sprint's CDMA 1xRTT network would be a surprise decision in light of the carrier’s previous plans to leapfrog EV-DO technology and move directly to EV-DV (Evolution, Data Voice) networks (see Lucent Guides Sprint's EV-DV).

EV-DO networks crank up the data rate from current U.S. cellular networks (CDMA2000 1xRTT) to a theoretical 2 Mbit/s, although they offer between 300 and 500 kbit/s in the real world. EV-DV networks -- as the name suggests -- also support voice communications.

Analysts believe Sprint has been forced into an EV-DO upgrade path as a direct response to rival Verizon Wireless’s plans for a nationwide deployment of the technology (see Verizon Repeats on 3G).

“Following Verizon’s lead with EV-DO, we sense that Sprint will move in this direction shortly,” note the number crunchers at Lehman Brothers.

“This step is a competitive response to Verizon’s recent 3G wireless data launch,” concurs Merrill Lynch. “Given time-to-market, competitive pressure, and relative higher maturity of EV-DO technology, Sprint decided, in our view, to use the EV-DO version.”

The network rollout is expected to benefit Sprint’s current bevy of suppliers.

“We believe Lucent, Nortel and Motorola could be early beneficiaries of Sprint’s expected launch, given their current position in Sprint’s CDMA network,” adds Merrill Lynch. “In the CDMA market, operators typically remain with their existing vendors for 3G migration since the EV-DO upgrade involves the deployment of additional line cards and other equipment to the existing base stations.”

Sprint was unable to return calls by press time.

— Justin Springham, Senior Editor, Europe, Unstrung

http://www.unstrung.com/document.asp?doc_id=54749