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Sprint Develops Small Cell Solutions for Higher Coverage

Zacks Equity Research

Sprint Corporation S recently announced that it is launching two new products in the market, namely — Pebble femtocell and Sprint Magic Box Silver — to enhance data coverage.

Pebble femtocell is the first-of-a-kind device created by Casa Systems, which is a pioneer in providing advanced ultra-broadband 5G solutions for mobile, cable, fixed and converged service providers. The product has been intricately designed to offer an untethered Wi-Fi backhaul option in conjunction with standard Ethernet connection to provide high-speed data services to customers.

The 6.5-inch portable device will expand data coverage by utilizing customers’ broadband connection instead of a regular call tower connection. Hence, the device can be placed anywhere without the hassle of connecting additional cables to the home router. It is expected to be available by the end of the year.

The Sprint Magic Box Silver — tailored and manufactured by Sercomm Corp — a Taiwanese manufacturer of broadband and wireless networking equipment, is a revamped version of Sprint Magic Box. Originally launched in 2017, Sprint has been able to deliver more than 370,000 devices. It proffers plug-and-play feature, which enables the device to automatically connect with the network, thereby enhancing the data speed and coverage at the same time.

This trailblazing technology, specifically designed for both business and residential customers, also delivers location flexibility and congruous LTE data coverage without any location constraints within the house. Like Pebble, this device too is expected to be available by the end of the year, followed by Sprint’s more recent launches — Sprint Magic Box Generation 3 and Sprint Magic Box-Hospitality Edition.

Existing Market Scenario

With a customer base of 54.3 million (as of Jun 30, 2019), the fourth-largest U.S. wireless carrier has lately been losing customers due to intense competition. The company's efforts to lure customers from rival carriers such as AT&T Inc. T and Verizon Communications Inc. VZ by offering attractive promotional plans and lucrative discounts have consequently resulted in high cash burn rate. Sprint also has a debt-laden balance sheet, which affects its cost of capital while trying to raise funds for network expansion.

However, Sprint’s all-stock merger with T-Mobile US, Inc. TMUS has won majority votes from Federal Communications Commission to facilitate faster and seamless deployment of 5G wireless networks across the country. Amidst several controversies, the combined entity is expected to have about 127 million customers, a strong closing balance sheet and a fully funded business plan along with a strong foundation of secured investment grade debt at close.

Sprint has long-term earnings growth expectation of 19.6%. This Zacks Rank #3 (Hold) stock has returned 10% compared with the industry’s growth of 18.9% year to date. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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