Replies to post #893 on Sprint Corp (fka S)

[slickwillski]

3rd UPDATE: Sprint to Seek New Funding As It Rolls Out Own 4G

2:58 PM ET 10/7/11 | Dow Jones

--Sprint will roll out its own 4G network, using same standard as rivals

--Move deals blow to partner Clearwire, which uses different standard

--Sprint may need to raise money to pay for network changes

--As for iPhone, Sprint sees higher near-term costs, but better profits and fewer lost subscribers

(Updates throughout with additional details.)

By Greg Bensinger

Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Sprint Nextel Corp. (S) on Friday spooked investors by saying it will need to raise money for a network upgrade and to help cover the higher costs expected from offering the iPhone.

Sprint also dealt a blow to Clearwire Corp. (CLWR), which provides Sprint's fourth-generation service on a standard known as WiMax, by revealing it will roll out its own nationwide 4G wireless network next year using a competing technology. Sprint owns 54% of Clearwire and is locked into a deal--worth at least $1 billion--for the use of its network through 2012.

Sprint shares were recently down 16.5% at $2.52. Clearwire plunged 33% to $1.36.

"Do we need to access the [capital[ markets? Yes," said Sprint finance chief Joe Euteneuer. "We want to make sure we had flexibility of when we access the markets."

That announcement chilled investors Friday. Sprint shares have been pressured by a drought of more than four years in contract customer additions and the increasingly troubled financial stability of Clearwire. And now that Sprint plans to join AT&T Inc. (T) and Verizon Wireless in offering the iPhone, it will have higher upfront outlays to supply the top-selling devices.

Sprint has committed to buying 30.5 million iPhones from Apple at a cost of $20 billion over four years, according to people familiar with the arrangements. Sprint conceded that its financial performance would be initially affected, though officials declined to discuss the terms with Apple.

The company said it had been preparing its network for months for the expected arrival of the iPhone and would be able to handle the increase in demand from the smartphone's data-hungry users. IPhone users will be among the most profitable on Sprint network and will lower the rate at which customers leave, said Chief Executive Dan Hesse.

Sprint began selling preorders of the top-selling device for the first time Friday.

At a conference in New York, Sprint said its first 4G markets using the standard known as Long Term Evolution--also favored by rivals AT&T (T) and Verizon Wireless--will be available in 2012 and the buildout should be complete by 2013 nationwide. The company has no plans to sell devices using Clearwire's WiMax 4G standard beyond 2012.

Bob Azzi, Sprint's vice president of network operations, said, "The speeds will be faster than WiMAX," the network offered by Clearwire.

The network plan helps to ease concerns that the third-largest U.S. carrier has been too reliant on Clearwire and misses out on some of the best-selling devices. The network upgrade, part of a $5 billion project known as Network Vision, may help Sprint stanch a decline of more than four years in the most lucrative contract customers.

Clearwire's chief fired back, saying Sprint had insufficient wireless capacity to handle data demands in the coming years and noted that Clearwire today is Sprint's only 4G offering. "Their dependence on us is never more profound than it is today," said Prusch in an interview. "The customers adds that they've gained have all been on our network."

Sprint's seemingly fading support raises questions about Clearwire's prospects, which was reflected in the markets Friday. Shares of Clearwire, down 76% over the past year, fell as much as 34% in volatile trading that was repeatedly halted because the stock kept tripping single-stock circuit breakers.

"We're in discussions with Clearwire," said Steve Elfman, Sprint's network operations president. "We don't have anything additional to announce today." Prusch declined to comment beyond saying Clearwire continued to look for additional sources of revenue and new network wholesale agreements.

"This is clearly not good for Clearwire," said Christopher King, a Stifel Nicolaus analyst. "Sprint said nothing about financial commitments."

Kirkland, Wa.-based Clearwire has said it will offer LTE 4G in major U.S. markets, using its own network equipment. It has said it needs about $600 million in additional financing to fund the upgrades.

To pay for the network upgrades, Euteneuer said the company may have to look to capital markets, but he didn't offer details. He said another option would be to draw from a $900 million revolver. Sprint expects as much as $11 billion in benefits from the network changes, which include shutting down the push-to-talk network, known as iDEN, it gained from the 2005 merger with Nextel.

As for the LTE rollout, the carrier plans to offer network coverage to about 120 million Americans by the end of next year and about 250 million by the end of 2013, Azzi said. He said the company had sufficient spectrum to carry it through 2014.

"It's a very rapid, very aggressive program," Azzi said.

Sprint, on its network equipment, also will host the 4G network of wireless venture LightSquared, which is backed by billionaire Phil Falcone's Harbinger Capital Partners hedge fund. LightSquared will have to resolve concerns that its network interferes with global-positioning systems before it can get regulatory approval to operate.

LightSquared's network would give Sprint additional spectrum to last it through 2015, Elfman said. The venture has pledged up to 50 percent of its capacity to Sprint.

-By Greg Bensinger, Dow Jones Newswires; 212-416-4676; [e-mail]

--Corrie Driebusch contributed to this report.

> Dow Jones Newswires

10-07-11 1458ET

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