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Sprint to invest in wireless network

It pledges $5 billion on WiMax broadband for hand-held devices.

August 17, 2007|From Reuters

TYSONS CORNER, VA. — Sprint Nextel Corp. made its biggest push yet to convince investors of its bet on WiMax technology, saying it would spend as much as $5 billion on a high-speed wireless network by 2010 and it forecast $5 billion in revenue a year later.

The No. 3 U.S. wireless carrier also said Thursday that it expected spending on the network through 2008 to be at the low end of its previous estimates because of an agreement to connect its network with smaller provider Clearwire Corp.

Some analysts and investors are skeptical of Reston, Va.-based Sprint's hopes for a largely unproven technology. The company aims to use WiMax to blanket entire cities with wireless Web access not just for phones but also for laptops, video game players and cameras.

"I find it hard to believe customers will be willing to pay for a broadband connection to their digital camera or their DVD player," said Todd Rethemeier, an analyst at SurTerre Research.

Bigger rivals AT&T Inc. and Verizon Wireless, a venture of Verizon Communications Inc. and Vodafone Group, have not said if they would use WiMax.

But Sprint Chief Executive Gary Forsee sees a distinct advantage in being first, as consumers expect more wireless capabilities from their hand-held devices.

"We in fact will have a mobile broadband network at least two years ahead of other providers that will be out there," Forsee told investors at a company conference in Virginia, where WiMax was the main topic.

The service will also help Sprint compete with wired data and video services at AT&T and Verizon, he said.

"Our view is that this grows the pie," Forsee said.

WiMax is expected to support Internet access at speeds as many as five times faster than typical wireless networks, although it will be slower than the fastest wired services.

Sprint said device makers had committed to making 50 million WiMax devices for the U.S. market in the next three years to bolster consumer interest.

Sprint's shares fell 43 cents to $18.20. Clearwire slipped 97 cents to $22.55.

Sprint expects to spend $2.5 billion on WiMax through 2008. It expects to reach a potential 100 million customers by then.

Sprint said it expected coverage to expand to 125 million people by 2010 at an additional cost of $2.5 billion.

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