Sprint Sells 1M LTE Phones

The third-largest U.S. wireless carrier Sprint Nextel Corp. (S - Analyst Report) announced that it sold 1 million of smartphones that support Long Term Evolution (LTE) technology. About 90% of the sales came from HTC Corp’s Evo and Samsung Electronics’ Galaxy S III phone.

Both the EVO and Galaxy S III phones are gaining increased traction in the U.S. market since their launch in May and July, respectively. In addition to these two phones, Sprint also offers three more 4G LTE smartphones - Galaxy Nexus, LG Viper 4G LTE and Samsung Galaxy S3. Further, the company expects to introduce Motorola Photon Q 4G LTE in the near future. We believe this strong line-up of handsets will add new customers while retaining the old; and lead to increased subscriber growth, reduced churn and higher average revenue per user.

Sprint is in the process of expanding its high-speed LTE networks in 100 additional cities in the coming months. It 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.

The LTE expansion is the part of the multi-billion dollar restructuring program known as the ‘Network Vision’, which aims to combine 3G and 4G technologies into one seamless network. 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 completed by the end of 2013.

These expansions will strengthen Sprint’s competitive position over the two major rivals- Verzion Communications Inc. (VZ - Analyst Report) and AT&T Inc. (T - Analyst Report).

We are maintaining our long-term Neutral recommendation on Sprint with Zacks #3 (Hold) Rank.