Sprint Nextel (NYSE:S) is having a 2011 that, so far, has been similar to its 2010 — uneventful and without much promise.
The company’s stock has hovered between $4 and $5 for nearly two years, while the telecom has grown increasingly desperate to fight the dominance of AT&T (NYSE:T) and Verizon (NYSE:VZ). Two years ago, Sprint controlled an 18% share of the U.S. mobile market. Now, according to a study conducted by Trefis published last December, Sprint controls a 9.5% share of the CDMA mobile market dominated by Verizon.
Considering that Apple (NASDAQ:AAPL) is about to add the iPhone to Verizon’s network — with no announcement of a Sprint iPhone forthcoming — it doesn’t look like Sprint’s market share is going to rebound soon.
In fact, Sprint appears to be taking steps to drive its customers as far away as possible. The company said Tuesday it’s raising the price of its 3G Everything data plans by $10. The so-called “premium data” charge will bring Sprint’s 3G data plans into the exact same price range as their current 4G pricing plans.
The press release announcing the move was itself titled “Smartphones Drive Wireless Data Explosion,” a shallow ploy to make it seem as though Sprint’s range of Samsung, HTC, and other phones are flying off shelves so fast that they have no choice but to drive up the cost of data usage to accommodate the burden of new users.
Sprint’s one selling point right now is the relative strength of its 4G network. The company’s 4G network began was introduced last November, with service in 61 markets, many of which were based in and surrounding the New York area. The two phones released for the network, Samsung’s Epic 4G and HTC’s EVO 4G, both of which played to positive reviews. The EVO Shift 4G only went on sale at the beginning of January, but the Epic 4G has seen modest sales since August. (Editor’s Note: This paragraph has been corrected. An earlier version of this story incorrectly identified Sprint’s 4G smartphones).
The network has since expanded to 70 markets, and with reliable service, it’s appealing for business clients. It’s a waiting game, though. Verizon’s LTE 4G network began limited service at the end of 2010, while AT&T’s is still only in the testing phase. When those companies bring their 4G networks to the masses later this year, likely alongside the release of Apple’s iPhone 5, Sprint will see its 4G market share plummet down to its 3G share.
What can Sprint do? It’s not out of the question for the iPhone to come to Sprint’s network. Apple’s operating chief, Tim Cook, said just last week that Apple’s deal with Verizon is nonexclusive meaning, that the CDMA iPhone could come to other carriers, like Sprint, sometime this year.
But will that be enough to help? Why would users pay for Sprint’s higher data plan fees unless its competitors follow suit?
On Feb. 7, Sprint plans to announce a new wireless device — speculation as to what it will be has been across the board, but the company’s insistence that the announcement will be “an industry first” seems to make an iPhone announcement unlikely. Barring that, it’s difficult to see Sprint shares breaking out of their $4-$5 range anytime soon.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here.
