Sprint to deploy network upgrades for three-channel carrier aggregation 'in a couple of months'

Sprint (NYSE: S) is on track to begin deploying three-channel carrier aggregation in the next few months, executives said, and it is already seeding the market with five supporting handsets.

But some analysts continue to question whether the carrier is spending enough on its network.

Three-channel carrier aggregation is a feature of LTE-Advanced that enables operators to combine bands of spectrum to create wider channels, producing increased capacity and higher speeds on supporting devices. Sprint currently uses two-channel aggregation over 40 MHz of spectrum on select 2.5 GHz cell sites, enabling it to deliver peak speeds of more than 100 Mbps in 237 LTE Plus markets across the U.S.

Sprint said earlier this year it achieved speeds of more than 300 Mbps in lab tests using the Samsung Galaxy S7. The Galaxy S7 Edge also supports the technology, as do three models the carrier declined to name. Executives also declined to say whether the next iPhone will support three-channel carrier aggregation.

"Just as a background, 74 percent of our postpaid (phone) sales in the second quarter were CA-capable, so there has been a rapid improvement and increase in CA-capable phones," CTO John Saw said during a conference call with analysts and press Monday. "So, the array of devices supporting CA is going to continue to increase, and we expect to be rolling out upgrades to the network to support three-channel carrier aggregation in a couple of months."

And just as the deployment of two-channel carrier aggregation paved the way for increased network speeds and capacity, customers with supporting handsets will notice as three-channel carrier aggregation comes online, Saw said.

"We expect, in actual deployments, customers should see speeds in excess of 200 megabits-per-second peak speeds. With the two-channel CA phones today that have been released, we do see the customer's experience improving significantly, and if you look at what's reported in the press, you can see anywhere from between 50 megabits per second to 120 megabits per second," Saw said.

"So there has been a significant increase, and with three-channel CA we expect the peak speeds to increase significantly," he continued. "But more importantly, what this really means for our customers is that the capacity for those networks, and for those sites with carrier aggregation, is also going to improve."

But some analysts continue to question whether Sprint is investing enough in its network to keep pace with its competitors. Those concerns surfaced in May when Sprint lowered its capex guidance for the rest of the year to $3 billion, down significantly from analysts' estimates in the range of $4.5 billion. And Sprint's latest earnings report did nothing to assuage them, analysts at MoffettNathanson wrote.

"Of all the myriad numbers in Sprint's Q2 earnings report – subscriber gains and losses, ARPU, churn rates, margins, etc. – one jumps off the page. Sprint spent just $473 million on its network (capex) in Q2," MoffettNathanson wrote in a note to subscribers. "Consolidated capex, again including phones, was 22 percent below StreetAccount consensus. Results of network tests suggest that Sprint's network is getting better, and Sprint's deep 2.5 GHz spectrum holdings give it undeniable advantages in spectrum aggregation at lower cost. But this much lower?"

Sprint executives continue to maintain that densifying the network with small cells is a cost-effective way to improve coverage and boost signal strength, and – as MoffettNathanson noted – third-party tests indicate Sprint has largely addressed the network concerns that were once its most obvious vulnerability. The next few quarters are likely to determine whether Sprint can continue to enhance its network sufficiently as it regains its financial footing.

For more:
- see this Seeking Alpha transcript
- read Sprint's press release

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