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Sprint Corporation (S - Analyst Report) announced the launch of 4G LTE services in 34 additional markets, spreading its coverage to 185 markets. We believe the expansion will not only drive revenues but will also give the company a better competitive position.

Sprint’s core platform business also depends upon the success of its multi-billion dollar restructuring program known as Network Vision. Through this plan, the company is concentrating on CDMA, WiMAX and LTE technologies that led to the termination of the Nextel platform (iDEN business) in Jun 2013. Sprint intends to cover around 200 million customers by this year-end through this program.

We believe the efficient use of capital, reduction of cell sites, the elimination of dual networks, backhaul efficiencies, reduced churn, lower roaming charges and energy cost savings bode well for Sprint’s long-term growth. Hence, network restructuring is expected to generate $10 billion to $11 billion in savings over a seven-year (2011–2017) period.

Moreover, Sprint’s OBITDA margin is expected to grow by 1200–1600 basis points (bps) by the end of 2014. About half of the margin expansion would come from the Network Vision plan and the other half will come from its core operations.

However, despite the company’s strong efforts, it continues to lag the top two carriers – AT&T, Inc. (T - Analyst Report) and Verizon Communications Inc. (VZ - Analyst Report) – in LTE deployments. AT&T and Verizon have a mammoth LTE coverage of approximately 400 and 500 markets, respectively. We believe that given more than 95% U.S. wireless penetration, competition is likely to remain intense. This will keep top and bottom line results under pressure as the carriers compete for additional market share.

Although Sprint has started reducing its net loss in the post-paid subscriber base, we remain concerned about the future return from this trend. If this trend does not continue, revenues from Sprint’s wireless segment will stressed once again as it was in the past several years.

Sprint Corp. which operates with CenturyLink, Inc. (CTL - Analyst Report) currently has a Zacks Rank #3 (Hold).

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