By Jody McCoy
Amir Rozwadowski of Barclays recently discussed the firm’s thoughts on Sprint’s network densification initiative, “Next Generation.” Rozwadowski expects that only time will tell whether or not the company’s initiatives will attract subscribers and investors. “While all eyes seem to be focused on a potential shift in the competitive landscape, Sprint’s ability to turn around its perceived network quality challenges seems to be top of mind for investors,” Rozwadowski wrote. “Whether or not the carrier can balance the need to successfully invest in its network in order to achieve what CEO Marcelo Claure believes could be one of the top two networks in two years while simultaneously manage its capital efficiently is the key question.” Details haven’t been released on Sprint’s “Next Generation” network strategy, but it seems the project will rely heavily on optimizing current technologies to provide densification needed to utilize its high band spectrum. “While we continue to expect the carrier to invest at the macro layer (particularly as our checks suggest the carrier has not finished adding 2.5GHz LTE capacity at all of its sites), we expect Sprint to take a surgical approach through the use of small cells in metro areas in order to bolster densification,” Rozwadowski wrote. “While questions on the effectiveness of the Network Vision initiative continue to linger, if the prior plan was executed correctly, the ability to leverage backhaul investments and in place multimode infrastructure should allow Sprint to take its next steps in a capital efficient manner.”
Rozwadowski also notes that the key questions on investors’ minds are: (1) does Sprint have enough capital to be able to effectively invest in its network; (2) when can noticeable change ultimately emerge; (3) will it be enough giving the potential shifting competitive landscape? “We believe management recognizes the carrier’s reputation of spotty execution. Thus while we expect visibility around its strategy to improve, we believe a focus on delivery vs. discussion is likely to emerge and wouldn’t expect a material step function in the carrier’s capex budget in the near term. Whether or not the carrier will be successful in its endeavors, however, will remain the key lingering question for some time,” Rozwadowski said.