Sprint Won't Abandon WiMax, Executive Reveals The VP for global broadband strategy at Sprint Nextel confirms reports of a possible joint venture or spin-off of its WiMax unit.
By Richard Martin InformationWeek Jun 19, 2007 12:00 PM
Saying "we are not getting out of the business of WiMax by any means," Don Stroberg, VP for global broadband strategy at Sprint Nextel, confirmed reports that the No. 3 U.S. wireless carrier is looking into a possible joint venture or spin-off of its WiMax unit. At an investor conference last week, Gary Forsee acknowledged that Sprint was exploring various options for the unit, and a report last week in the Wall Street Journal quoted anonymous sources as saying that those options include a possible joint venture of some kind with Clearwire Corp., which, like Sprint, is planning a nationwide broadband wireless network using WiMax technology. Saying that "having a coordinated, cohesive use of the 2.5 spectrum makes a lot of sense from our perspective and from theirs," Stroberg does not rule out a possible alliance with Clearwire at some point.
"At a minimum, because we have markets that bump up against each other, it would make sense to cooperate on how to utilize spectrum, how to coordinate on cell-site builds, on benchmarking, and so on," adds Stroberg. "You don't have to imagine too far to see how those things could work into other types of cooperation. "
Since announcing its plans for a WiMax network last fall, Sprint has seen its core business in cellular voice deteriorate, losing subscribers to its two major rivals, AT&T (formerly Cingular Wireless) and Verizon Wireless, while experiencing a high rate of customer churn. At the same time, Sprint has been successful in lining up subscribers for another wireless broadband service, based on EV-DO technology. The carrier said today its EV-DO service now "reaches" (i.e., covers an area with a population of) 203 million.
Sprint's wireless data revenue hit $1.2 billion in the fourth quarter of 2006, not far behind Verizon and AT&T, according to wireless industry analyst Chetan Sharma. Sprint's average revenue per user for wireless data, at just under $9, leads the industry.
Wall Street has responded. Since August, Sprint's share price has risen by 40%. Still, there are questions about whether Sprint can afford to build an expensive, essentially untried WiMax network alone.