Sprint blames 'vendor execution' as a reason for Network Vision delays

Carrier expects to complete network modernization in mid-2014
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Sprint Nextel (NYSE:S) said poor execution by its network vendor partners in the latter part of 2012 was part of what caused it to delay LTE deployments and its larger Network Vision network modernization plan, according to a securities filing.

"During the second half of 2012, we experienced delays with vendor execution, backhaul connectivity delays, shortages in equipment such as fiber cable and antennas, as well as other regulatory and environmental issues," the company said in its 10-Q filing with the Securities and Exchange Commission. "However, we expect that we will recover from these delays and we are still forecasting to have the majority of the sites on-air by the end of 2013 with expected completion of Network Vision deployment by the middle of 2014."

Sprint said recently that it plans to cover 200 million POPs with LTE by the end of this year, which is down from the company's initial target of 250 million POPs. The company also now expects to put the finishing touches on the effort by the middle of 2014; the company previously planned to finish the project by the first quarter of 2014.

Alcatel-Lucent (NASDAQ: ALU), Ericsson (NASDAQ:ERIC) and Samsung are the main vendors for Sprint's Network Vision network modernization plan, with each having responsibility for a geographical area. "Network Vision has reached a good pace and we're pleased with the service improvements we're seeing," Steve Elfman, president of network operations at Sprint, said on the company's first-quarter earnings conference call, according to a Seeking Alpha transcript. "We expect this to be an important year for Sprint with the Nextel network shutting down and the modernization of the network expected to be substantially complete by the end of the year."

"In Q3 last year we said we were about a quarter behind and expected to have 12k sites on air by the end of the first quarter 2013 instead of by the end of 2012. We exceeded that target by about 1,500 sites," explained Sprint spokeswoman Kelly Schlageter.

Sprint's Network Vision project includes the deployment of its LTE network and enhancements to its CDMA network. The company began the deployment of CDMA voice on its 800 MHz spectrum in the first quarter and expects to deploy LTE on 800 MHz in the fourth quarter. The company currently has more than 13,500 Network Vision sites on air compared to more than 8,000 reported on Feb. 7. Network Vision will encompass around 38,000 total cell sites.

Elfman said on the earnings call that zoning is complete at more than 32,000 Network Vision sites and construction is ready or underway at 25,000 sites. The move to one unified multi-mode network is tied to the shutdown of the Nextel iDEN network, scheduled for June 30. Sprint expects Network Vision to "reduce network maintenance and operating costs through capital efficiencies, reduced energy costs, lower roaming expenses, backhaul savings and reduction in total cell sites."

For more:
- see this SEC filing
- see this Seeking Alpha transcript

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