Sprint Nextel (NYSE:S) is evaluating final bids from six vendors on a massive network modernization project that will decrease the number of the carrier's cell sites from 66,000 to 46,000, the company's CFO said.
Sprint's Bob Brust said during an investor conference that the carrier's network modernization will provide "substantial savings" once it goes into effect.
Brust said the six vendors, which he did not name, provided proposals for the project earlier this year. He said Sprint's management team is reviewing the vendors' final bids now, and that Steve Elfman, president of Sprint's network operations and wholesale, is spearheading the process. Brust said a decision on the issue should be made shortly, and that Sprint likely will provide details on the effort later this year.
Brust explained the project is geared toward reducing Sprint's network expenses--costs that have been exacerbated by the carrier's need to maintain two separate networks, CDMA and iDEN, amid dramatic customer losses during the past three years.
"We don't need those (sites)," Brust said. "We need to pull that way down by about 20,000 towers."
Brust said Sprint expects to be able to provide appropriate wireless service coverage throughout the process.
Brust declined to provide a number of specifics, including which vendors are bidding for the contract (Huawei is reportedly one) and how much it would cost. However, BTIG analyst Walter Piecyk reported on Sprint's network modernization plans earlier this week, noting that the carrier is looking for multi-mode radios for its base stations and that the cell-site reduction could cost as much as $2.5 billion.
Sprint is no stranger to blockbuster network deals; the company in July, 2009, inked a seven-year, $5 billion network outsourcing deal with Ericsson (NASDAQ:ERIC).
Brust noted that much is riding on Sprint's planned network modernization project: "We gotta get this one right. We got to make sure our vendors are doing this one right."
Brust's comments on Sprint's network plans sparked questions from the audience of investors about the carrier's plans for Clearwire (NASDAQ:CLWR). Sprint owns a 54 percent stake in Clearwire, and is reselling Clearwire's WiMAX service under the "Sprint 4G" moniker. An audience member asked Brust whether Sprint should purchase Clearwire outright in order to align Clearwire's buildout efforts with Sprint's network modernization project.
"The best thing over time would be for us to have more control over" Clearwire, Brust said, noting though that Sprint doesn't have the cash to purchase Clearwire outright and concurrently overhaul its network. Thus, he said Sprint will have to take a wait-and-see approach to its relationship with Clearwire. However, Brust said that Sprint would prefer to have operational control over Clearwire.
Interestingly, Brust also discussed Clearwire's financial position and business strategy.
Clearwire "will need cash down the road," Brust said. "They haven't told us what they need."
Brust declined to speculate on whether or how much more cash Sprint would funnel into Clearwire, but said "I can't imagine we're not going to get this worked out."
As for Clearwire's business strategy, Brust implied that Sprint management doesn't think Clearwire should engage in a direct-to-consumer effort.
"For them to jump into that may not be the easiest thing in the world," Brust said, noting that, on the retail front, Clearwire will have to fight against behemoths like Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T) as well as T-Mobile USA, Leap Wireless (NASDAQ:LEAP) and others. Brust said Clearwire was initially founded to aggressively build out a 4G network and then offer it on a wholesale basis.
Clearwire recently has been expanding its direct-to-consumer retail operations. The company early last month launched the iSpot, which provides prepaid data services to Apple (NASDAQ:AAPL) products, including the iPhone and iPad. And late last month Clearwire introduced its new prepaid brand, Rover, and associated service pricing.
Finally, Brust said he will leave Sprint next year; Sprint previously disclosed it is looking for a new CFO.
For more:
- see this Reuters article
- listen to this webcast
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