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Can Sprint Improve Its Network with This Move?

By Chris Neiger – Jul 28, 2015 at 10:00AM

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Sprint has big plans to improve its network over the next two years, and it's looking to small technology to do it.

Sprint (S) knows it needs to boost its network quality. The company continually fights tooth-and-nail against T-Mobile (TMUS 0.17%) for the No. 3 and No. 4 network spots -- far behind U.S. wireless network leaders Verizon Communications and AT&T. And while T-Mobile has sprinted toward a massive LTE rollout over the past few years, Sprint's upgrades have been less drastic. 

But that hasn't stopped the carrier form saying that its network will take the No. 1 or No. 2 network quality spot in the largest U.S. markets two years from now. It's going to take some major upgrades to get there, and if some new analyst information proves true then we may now know how Sprint plans to pull it off. 

Source: Sprint.

Big plans, small cells
According to information from analysts at Wells Fargo and Evercore ISI -- first reported by FierceWireless -- Sprint plans to boost its network by adding about 70,000 small cells, as well as an undetermined amount of macro cells (large towers).

The small cell tech is an important angle for Sprint to play because they provide an easier way to boost coverage and capacity without having to take the time and money to build large towers. The small cells are affixed to existing builds, and help improve signals in dense urban areas. 

All of this is part of Sprint's so-called Next Generation Network (NGN), which it announced earlier this year. The company has been purposefully vague about how NGN will be built out, but we'll find out more when the company reports its quarterly earnings in the next few weeks.

If Sprint does goes through with the massive small cell build-out, it could put a strain on the suppliers in that market. Kevin Smithen, an analyst at Macquarie Capital, told Investor Business Daily this week that he thinks that an order of 70,000 Sprint cells could be more than the suppliers can handle. Verizon is building out its small cell network as well, and a large order of cells from Sprint could make it difficult for supplies to keep up. 

Sprint needs this
Right now the small cell expansion is just rumor, but it coincides with other reports over the past few months that Sprint will use small cells to increase and improve coverage. Improving its network is paramount for Sprint as it works to build back its subscriber numbers. 

The company has done a pretty good job turning around its dismal numbers as of late, adding 231,000 postpaid net subscribers (phone and tablet) in fiscal Q4 2014 (ending in May). But its phone subscriber additions were still in the negative last quarter -- losing 231,000 over a three-month period, up from a loss of 500,000 a year earlier. 

In addition, T-Mobile now claims the same LTE coverage as Sprint -- 280 million points of presence -- in the U.S. Meanwhile, the so-called Un-Carrier is adding subscribers left and right, and catching up quickly to Sprint's customer numbers, and may even announce that it's overtaken Sprint's subscriber numbers next month. 

That's why the next phase of Sprint's network is so important. It's not enough for Sprint to just add new subscribers -- it needs to improve its network quality so that those subscribers actually stick around.

Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Verizon Communications and Wells Fargo. The Motley Fool owns shares of Wells Fargo. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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