The Cable Guys Could Be Sprint's Last Chance
Is the enemy of your enemy your friend? If so, it would explain why Time Warner Cable (NYSE: TWX) and cable rival Comcast (Nasdaq: CMCSA) are planning to team up and form a wireless broadband venture, powered by Sprint Nextel (NYSE: S) and Clearwire (Nasdaq: CLWR).
Comcast is expected to inject $1 billion or more into a nationwide WiMAX venture, while Warner should contribute around $500 million. Other high-profile partners, according to The Wall Street Journal, include Intel (Nasdaq: INTC) with another billion-dollar stake and its technology expertise, as well as "hundreds of millions of dollars" from Google (Nasdaq: GOOG).
Conspicuous by their absence from this partnership are the telecoms, other than erstwhile implementer Sprint. Verizon (NYSE: VZ) et al. have been making inroads on the cable operators' turf with TV services over high-bandwidth fiber-optics connections in the past couple of years, and it seems only natural for the cable companies to strike back with wireless-data services.
But as important as the initiative might be for Comcast and friends, it's make-or-break time for Sprint. The flagship cell-phone service is limping badly and forced to make drastic moves to stay relevant to today's discerning mobile consumer. In the long run, Sprint could be forced out of its favorite market. If (some would say when) that happens, Sprint had better have a backup plan, like the WiMAX service.
The talks could still come to naught, says the Journal. Until we know what happens to this crucial project, I wouldn't touch Sprint's stock with a 200-foot cell-phone tower.
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