Sprint Seeking Capital Sources to Build 4G Network

One of the major telecommunications service provider in the United States Sprint Nextel Corp. (NYSE:S) in an announcement said that it needs to build capital in order to switch to 4G after having said that the company plans to 4G in an aggressive way.

This announcement follows Apple Inc.’s (NASDAQ:AAPL) move to include Sprint as one of the carriers for its new iPhone 4S. The new development has had an impact on the shares of the company which had risen by about 5 percent after the previous announcement took an opposite turn to go south by 8 percent at $ 2.87. The company needs to raise more money in order to develop the  wireless network in order to accommodate the latest LTE cellular broadband standard to switch to 4G in the coming years said the Chief Financial Officer, Joseph Euteneuer in a meeting with the investors. The meeting was conveyed to update the investors about the future strategies of the company and its financial outlook.

Sprint had earlier announced its plans to have its own 4G LTE service built by next year in order to keep with its rivals. Sprint Nextel had also confirmed the availability of around 15 LTE devices in the coming year alone and had planned of launching the first 4G LTE device by midsummer in the United States.

The new 4G LTE technology, if implemented by Sprint Nextel, it will have a faster wireless technology than that of Clearwire which utilizes WiMax technology . According to the executives of Sprint, the company’s plan to build the new 4G Network is estimated to cost somewhere around $ 10 billion in capital expenses in the next 2 years and for that to happen the company has to tap markets to garner the necessary funds which in other words mean Sprint is contemplating on dilutive equity raise.

The current 4G network of Sprint is supported by Clearwire Corp. (NASDAQ:CLWR) which runs on WiMax network and the announcement of Sprint focusing on its own network surprised many as they had expected Sprint to increase its investments in its partnership with Clearwire . Soon after the announcement, Clearwire fell further down and its shares are currently down by 26 percent or 54 cents at $1.51.

In other news, Sprint’s executives have told that the carrier is ready to handle the increase in data demand by selling iPhone as the carrier. Sprint is currently paying high subsidies to Apple Inc. to introduce its new iPhone 4S and iPhone 4 8GB to its customers.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.