(S) Sprint Plans 4G Data Pricing

The third-largest U.S. wireless carrier Sprint Nextel Corp. (S) announced that it will roll out two new 4G tablet data plans with the launch of the first 4G tablet “HTC EVO View 4G” on June 24.

Currently, Sprint offers three monthly data plans: 1 GB of data for $20, 3 GB for $45 and 5 GB for $60. Concurrently with the launch of the first 4G tablet, the company will introduce a data tier for 10 GB as well as an unlimited WiMax data usage option for customers subscribing to data tiers of 3 GB and above. Sprint will charge $90 for the new 10 GB data plan.

The introduction of new-tiered pricing plan is a step forward in making the WiMax pricing plans more popular among existing and new subscribers. This will lead to higher average data revenue per subscriber, thereby boosting the company’s subscriber base.

Sprint currently offers 4G WiMax services in collaboration with Clearwire Corp. (CLWR). The company will also provide 4G services through a 15-year deal with LightSquared, as reported by Bloomberg earlier in the week.

4G services are growing rapidly. Sprint’s 4G WiMax is a major opportunity in the wireless market, which may drive its future revenues. The company’s 4G services covered 71 U.S. markets and reached 120 million people at year-end 2010. The coverage is likely to touch 130 million by the end of 2011.

Sprint continues to focus on device leadership, especially in 4G. The company plans to launch 10 wireless devices (smartphones and tablets) in collaboration with Motorola Mobility Inc. (MMI) this summer. The “Motorola Photon 4G” smartphone and “The Motorola Triumph,” are on the top of the 10 new device list. In addition, the launch of  4G tablet “the BlackBerry 4G PlayBook” and a handset “the Nexus S 4G” should also boost margins and earnings going forward.

We believe the new pricing plans as well as increased 4G services will improve Sprint’s competitive position. Currently, the company faces stiff competition from AT&T Inc. (T) and Verizon Communications (VZ) in gaining market share.

We are currently maintaining our long-term Neutral recommendation on Sprint supported by a Zacks #3 Rank (Hold).

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