SEOUL (Reuters) - Sprint Nextel Corp (S.N), which recently said it would spend up to $5 billion on a mobile high-speed wireless standard by 2010, said it had awarded the New York WiMax market to Samsung Electronics Co. Ltd. (005930.KS).
Samsung had previously been awarded the Washington, DC, Baltimore, Philadelphia, Providence, R.I. and Boston markets as part of Sprint’s push to use the mobile WiMax wireless standard.
“Those are very good markets that we’ve given to Samsung,” Barry West, president of Sprint’s high speed wireless unit, told Reuters on Monday after Samsung made the official announcement on the sidelines of the Samsung 4G Forum.
Samsung officials also sounded an upbeat note, with Choi Gee-sung, president of its telecommunications unit, saying the mobile WiMax business could turn profitable within the next 3 to 5 years.
Samsung in a news release separately predicted its handset sales would top 40 million units in the third quarter, after selling a record 37.4 million handsets in the second quarter.
Neither company disclosed financial information regarding the contract. Samsung was awarded lead vendor status, which includes the manufacture and installation of radio access equipment and the supply of chipsets and mobile devices.
Earlier this month, Sprint, the No. 3 U.S. carrier, made its biggest push yet to convince investors of its bet on mobile WiMax technology, saying it would spend heavily on the high-speed wireless network by 2010 and predicting up to $5 billion in revenue a year later.
It is working with top telecommunications players Nokia NOK1V.HE, Motorola MOT.N, Samsung and chip maker Intel Corp. (INTC.O) to develop chips, devices and network gear for such services.
It has also reached a deal to feature Google’s (GOOG.O) Web search services via a portal for its WiMax devices.
Some analysts and investors remain skeptical of the companies’ hopes for a largely unproven technology. Sprint has said it aimed to use mobile WiMax to blanket entire cities with wireless Web access for not just phones, but also laptops, video game players and cameras.
“There are just too many uncertainties regarding mobile WiMax to come up with accurate valuations,” said James Kim, an analyst with Lehman Brothers.
“The network equipment business is an extremely difficult one, with specific geographic constraints in every market. There are just too many undecided factors.”
Mobile WiMax is expected to support Internet access at speeds as much as five times faster than typical wireless networks, though it will be slower than the fastest wired services.
Sprint’s West sounded upbeat on WiMax’s potential to draw in a growing number of Internet users.
“Once you get 50 million devices into the marketplace, mobile devices will gather momentum and manufacturers will embed mobile WiMax into a whole array of products,” West said.
He was referring to Sprint’s earlier announcement that manufacturers had committed to making 50 million WiMax devices for the U.S. market in the next three years.
Sprint has said it expects the network to generate positive operating income before depreciation and amortization in 2010.
The company expects to reach a potential 100 million customers through 2008, with Sprint providing coverage to 70 million people and smaller partner Clearwire Corp CLWR.O covering 30 million.