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The third-largest U.S. wireless carrier Sprint Nextel Corp. (S - Analyst Report) added 4G LTE services to four more cities namely Baltimore, Gainesville, Manhattan/Junction City and Sedalia.

The move is part of the multi-billion dollar restructuring program known as Network Vision plan, which aims to combine 3G and 4G technologies into one seamless network. This would lead to 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. As a result, the plan is expected to generate $10 billion to $11 billion in savings over a seven-year period (2011–2017). The company expects the Network Vision deployment to be over by the end of 2013.

The expansion will strengthen Sprint’s competitive position in LTE deployments. Sprint is about a year and a half behind the wireless giant Verzion Communications Inc. (VZ - Analyst Report) and 10 months behind the second wireless carrier AT&T Inc. (T - Analyst Report) in deploying LTE networks.

Sprint made its LTE debut in five major markets – Atlanta, Dallas, Houston, Kansas City and San Antonio – in mid-July. The company expects to complete nationwide deployment by the end of 2013. The LTE coverage is expected to reach more than 120 million people (or roughly half of its CDMA footprint) by the year-end and 250 million by next year.

Since Verizon launched its 4G LTE in December 2010, it has deployed the service in 337 markets, covering more than 200 million people (nearly 75% of the U.S. population). Verizon expects to expand its 4G networks to the entire nationwide 3G footprint by mid-2013. AT&T LTE service is currently available in 47 markets covering more than 275 million in population. AT&T expects this deployment to reach to 80% of the U.S. population by next year.

In addition to the LTE rollouts, Sprint also plans to upgrade its existing 3G networks in Baltimore, Boston and Washington DC.

No doubt, these LTE investments will dilute Sprint’s free cash flow for the next two years. However, liquidity is expected to improve once LTE is fully deployed.

We are maintaining our long-term Neutral recommendation on Sprint. For the short term (1–3 months), the stock retains a Zacks #3 (Hold) Rank.

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