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The third-largest wireless carrier in the U.S., Sprint Nextel Corp. (S - Analyst Report) continue to expand its high-speed 4G Long Term Evolution (LTE) technology in the country by adding 11 new markets. The new markets also include Harrisburg, Pa., South Bend/Mishawaka, Ind., Muncie, Ind., Peabody, Mass., and Salina, Kan.

Proliferation of smartphones and tablets has increased the demand for much faster network services. So, in order to meet the increasing subscriber demand as well as to compete with early movers like Verizon Communications Inc. (VZ - Analyst Report) and AT&T (T - Analyst Report), Sprint is continuously launching its 4G LTE services across the U.S. markets.

Presently, Sprint has presence in 43 markets and is significantly behind Verizon and AT&T that have presence in 441 and 103 markets, respectively. The company has started offering 4GLTE service from July and plans to successfully deploy its LTE services to cover its nationwide network by the end of 2013, encompassing more than 250 million customers with 22,000 cell sites. The successful deployment will not only allow the company to sideline its existing WiMax Network, but will also help it to reduce cost by installing fewer cell sites.

The development is part of Sprint’s network upgrade plan, Network Vision, which aims to combine various 3G and 4G technologies into one seamless network; hence leading to efficient use of capital, reduction of cell sites, the elimination of dual networks, backhaul efficiencies, reduced churn, lower roaming charges and energy cost savings.

On the flipside, we believe that increased investment for the deployment of LTE networks across the U.S. by 2013 will curtail 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 Zacks #3 (Hold) Rank.

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