Sprint's Claure heads to Japan to get Son's sign-off on network densification plan

Sprint (NYSE: S) CEO Marcelo Claure left for Japan yesterday to meet with SoftBank CEO and Sprint Chairman Masayoshi Son to discuss Sprint's network densification project. According to one Wall Street research firm, Sprint may soon boost its capital expenditures for 2015 once Son signs off on the plan.

In a post on Twitter, Claure said that he was going to Tokyo "to visit my big boss and finalize our new network plan!!"

Macquarie Capital analysts Kevin Smithen and Will Clayton wrote in a research note that Sprint will launch a Cloud Radio Access Network (C-RAN) solution as part of its new "Next Generation Network" strategy, which Sprint disclosed earlier this month.

"We continue to believe that Sprint will incorporate C-RAN technology over small cells as part of its network architecture at substantial savings per node/site over earlier Network Vision deployments," they wrote.

C-RAN leverages distributed base station architecture to enable a host of benefits, such as savings on network spending and energy. The technology essentially moves much of the processing functions of a wireless network into the cloud, making the construction and deployment of base stations significantly cheaper.

Sprint has said it will spend $5 billion on capex in its fiscal 2015, which runs through end of March 2016. Claure indicated on Sprint's first-quarter earnings call that most of the capex spending for the network densification will come in 2016. However, Sprint CFO Joe Euteneuer said on the call that Sprint plans "to provide further updates in the future as our network plans continue to evolve."

Sprint has issued a request for proposal (RFP) for the network work, and is currently evaluating proposals from vendors. Although Claure and other Sprint executives have declined to reveal exactly how many small cells and macrocells Sprint is planning to add to its network, Claure has said that the carrier's long-term plan is to dramatically increase its coverage and capacity and over time, and also deploy Voice over LTE (VoLTE) technology.

"Sprint's $5 billion network capex forecast guidance appears to be a placeholder until Son-san and SoftBank sign-off on the new plan (and we assume, long-term financing strategy)," the Macquarie analysts wrote. "We expect that Sprint will provide to the market a more detailed 2-3 year capital plan over the coming months, once the network design is finalized and RFPs are completed."

The analysts added: "In our view, investors should not mistake Sprint's lack of specificity on capex guidance for a lack of a plan. We just believe that plan was not finalized before Sprint's earnings call."

Earlier this year a source familiar with Sprint's network plans told FierceWireless that the company was planning to significantly expand its LTE network by adding potentially up to 20,000 cell sites and repurposing existing sites. In a recent interview with FierceWireless, Sprint CTO Stephen Bye declined to say how many sites Sprint will add.

"Within our footprint, what we'll do is make sure that we deliver a consistent and reliable experience," he said. "As we look at densification, it's not simply about building for capacity." Sprint can achieve that with its 2.5 GHz spectrum on its own, he said. The goal is to make sure data speeds and performance are increased throughout the network, he added.

SoftBank just announced its quarterly earnings in Japan, and as part of that announcement Son promoted former Google (NASDAQ: GOOG) executive Nikesh Arora to the role of president of SoftBank. Son also essentially appointed Arora as his successor.

For more:
- see this Kansas City Business Journal article

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