Sprint Again Shows Why It Is in Third Place

Verizon Wireless has deployed its superfast 4G LTE wireless broadband in most large markets around the U.S. AT&T (NYSE: T) is behind in deployment, but not by much. It should have a footprint similar to Verizon’s later this year. In the meantime, the third-place carrier, Sprint-Nextel (NYSE: S), has barely deployed its LTE network at all. This is another reason that Sprint cannot add new customers and is floundering as its competitors advance.

Sprint’s 4G LTE service, part of its Network Vision rollout, will reach 10 or fewer cities by mid-year. That means it cannot claim it has anything close to national coverage until 2013, at the earliest.

Sprint took a chance with long odds when it tried to take an early lead in 4G with its WiMAX product. Sprint made the critical mistake of adopting of a standard that was never likely to be used by all other major carriers. It now pays for that gamble with its late entry into the market with the widely accepted LTE product.

Sprint has made a long series of missteps, with its LTE rollout only the latest. Also among them was a lack of concentration on customer service, which damaged its reputation for years. The company argues that its merger with Nextel cost its the ability to properly serve customers from both that firm and Sprint. It may be a reasonable excuse, but that has not helped Sprint shareholders or customers. It has, however, helped freeze Sprint’s customer base at about 50 million. AT&T and Verizon Wireless have continued to grow. Sprint cannot play catch-up in a saturated U.S. market in which cell phones outnumber people. Carriers can add customers only by taking them from the competition.

However much Sprint’s customers have suffered, its shareholders have been hurt more by the company’s poor strategic decisions. Over the past five years, its stock is down more than 80%, compared to a 10% drop by AT&T. AT&T’s dividend more than makes up for its share performance shortfall.

Sprint’s late LTE rollout will ensure that it continues to languish in third place, far behind its competition.

Douglas A. McIntyre