Sprint Nextel Corp., the third- biggest mobile-phone company in the U.S., will spend as much as $5 billion by 2010 to build its high-speed wireless network.
Spending on the technology, known as WiMax, will total about $2.5 billion by the end of 2008, Reston, Va.-based Sprint said Thursday in a statement. The company may spend another $2.5 billion over the following two years, expanding the network to reach more than a third of the U.S. population.
Sprint expects to generate as much as $5 billion in 2011 sales from the network, which may be five times faster than today’s wireless standard. Chief executive Gary Forsee is upgrading Sprint’s technology to staunch customer defections after monthly subscribers dropped in three of the past four quarters.
“It’s still a big leap of faith,” said Michael Nelson, a New York-based analyst at Stanford Group Co., referring to the WiMax project. He rates Sprint’s shares “hold” and doesn’t own them. “They’re talking about something that’s not going to generate a huge amount of revenue until 2010.”
The spending through 2008 is at the low end of its original budget of $2.5 billion to $3 billion. Sprint cut the cost of the project by enlisting the help of Clearwire Corp., the Internet provider started by Craig McCaw, in July.
The two companies’ customers will share their WiMax networks, and the service will be promoted under one brand, Xohm.
WiMax technology allows devices such as mobile phones and laptops to access the Internet across entire cities, instead of being limited to the smaller areas served by wireless-fidelity, or Wi-Fi, networks.
