Despite Sprint's long-running problems--including credit-rating downgrades and declines in postpaid subscribers--a Barron's report predicts the company's stock and standing could improve significantly next year on the back of prepaid growth and success in mobile WiMAX. Indeed, Sprint Nextel's stock may rise as much as 50 percent, according to Barron's.
A number of factors--so far unrecognized by investors--could contribute to the company's position. Sprint just completed its acquisition of Virgin Mobile USA, effectively doubling its bet on prepaid, which could continue to be a growth engine as postpaid business stagnates industry-wide.
The other main area where Sprint could see tremendous growth is in 4G. As a wholesale partner (and majority owner) of Clearwire, Sprint is poised to cash in on the business, if it is successful. The key to 4G success, however, will be new WiMAX devices, which Barron's said Sprint will introduce in "early 2010." Last week, Clearwire CEO Bill Morrow said there will be WiMAX handsets on the market by next Christmas.
Yet all is not rosy for Sprint. In November, Moody's Investors Service reduced Sprint credit rating, a further marker of concerns about the company's ability to turn around its struggling postpaid business. Standard & Poor's Ratings Service also warned the company last month that its credit rating was at risk of being downgraded.
For more:
- see this Barron's article (sub. req.)
- see this Reuters article
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