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Sprint Offers New Ms Office 365

Zacks Equity Research

Sprint Nextel Corp. (S) is offering an array of customized services for its enterprise customers through the enhanced cloud-enabled Microsoft Corporation (MSFT) Office 365. The company has various service plans under Office 365 that offer the flexibility to choose individual products or bundled tools in a single billing system.

In addition, the company introduced two new product versions of Microsoft Office 365, namely, Sprint Professional Plus with Office 365 and Sprint Preferred with Office 365. Professional Plus with Office 365 would provide the existing cloud-based services included in Microsoft Office 365 apart from the download version of Office 2013 known as Office 365 ProPlus. Preferred with Office 365 include products like Active Directory and IT policy management services along with Office 365 ProPlus.

We believe that the company’s move to enhance its enterprise product platform by offering enhancements is part of its Network Vision strategy to expand core Sprint platform. The company is already increasing penetration of smartphones, iPhones in particular, and introducing data plans to accelerate post-paid wireless subscriber growth. Further, incorporating new products from the Microsoft Office 365 family to the Sprint portfolio is expected to generate additional synergies by increasing contractual services.

As part of the Network Vision strategy, the company launched LTE services in five major markets in Jul 2012. In 2013, the company expects to have LTE coverage for approximately 200 million customers and 170 additional markets, depending upon backhaul availability. Sprint has already completed the 29,000 cell sites and leased 27,000 cell sites at the end of 2012. The Network Vision strategy is expected to result in the efficient use of capital, reduction of cell sites, elimination of dual networks, backhaul efficiencies, reduced churn, lower roaming charges and energy cost savings. Hence, the through this program the company is expected to generate $10 billion to $11 billion in savings over the next seven years (2011–2017).

Nevertheless, increased competition from top carriers like AT&T, Inc. (T) and Verizon Communications Inc. (VZ), heavy investments, lofty iPhone subsidies and continued wireline margin erosion keep us on the sidelines. In addition, we also remain cautious about the Sprint, SoftBank and Clearwire Corporation deal, which might face opposition from rival companies as it will result in concentration of spectrum.

Sprint has a Zacks Rank #3 (Hold).

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