Sprint WiMAX Spending Creeps Up


After we crawled out from under the CES/iPhone news pile last week, we took another look at Sprint Nextel’s update on WiMAX and its new guidance. We knew the news wasn’t too good, projecting that the company will cut 5,000 jobs, but we thought that the company might have lowered some of its WiMAX spending as well. Interestingly enough, Sprint is actually spending a bit more on WiMAX in 2007 than it had previously projected.

Sprint projects it will spend a total of $1.1 billion on WiMAX in 2007, “$300 million of start-up operating costs associated with WiMAX 4G broadband services,” and $800 million on WiMAX capital expenditures this year, according to the latest update. In the original release the company said “Sprint Nextel is expecting to invest $1 billion in 2007 and between $1.5 billion and $2 billion in 2008 relating to the 4G mobile broadband network.”

When I asked a Sprint spokesperson, “Isn’t that actually more than originally projected,” the spokesperson said, “Yes. But to be frank I think most interpreted the original release to read as capex instead of both.”

Splitting up the costs is a nice way to make the company look like they’re spending less on WiMAX, though, in case Wall Street was worried about that. Perhaps this means the company will end up spending over its $3 billion outside figure on the network.


Jesse Kopelman

$300M in start up costs seem really excessive for a company already in the mobile data network biz. Clearly, some people are avoiding fat trimming within Sprint/Nextel by shifting their budgets over to WiMax. This happened quite a bit with AT&T/AT&T Wireless/Project Angel. Not a good sign for Sprint’s long term health or the short-term success of Sprint WiMax.

Sean Doherty

Om – I have a feeling these numbers will continue to “evolve” a bit as Sprint learns more about their needs. The clarification from Sprint about Capex vs Opex is not really “spin”. It’s a clarification that helps investors. Most investors would favor more Capex than Opex for this 4G startup initiative as the Capex gets amortized over many years and will have less impact on earnings as they spend the money in 2007-8.

Sean Doherty

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