Speculation Intensifies Over Sprints Future
Posted on: Tuesday, 6 May 2008, 12:00 CDT
Split-up and spinoff options, possible takeovers and other deal talk engulfed Sprint Nextel on Monday as company leaders ponder moves to stabilize Kansas City's largest corporate employer.
Rampant speculation, along with a development that definitely threatens Sprint with the loss of some 800,000 subscribers, swirled one week before new Sprint CEO Dan Hesse is to stand before his shareholders for the first time at an annual meeting in Reston, Va.
Sprint shares edged higher early on renewed reports that Germany's Deutsche Telekom was pondering an offer to take over the Overland Park wireless company. Later in the day, Sprint shares shot higher, closing up nearly 11 percent, amid reports that Hesse could cleave the Nextel side of a company troubled by customer defections and uncertainty posed by legal setbacks.
Meanwhile, expectations are growing that Hesse soon will announce a new multibillion-dollar joint venture with Comcast, Time Warner Cable, other cable companies, and possibly Intel and Google. All the partners would chip in for an effort to build a national high-speed wireless network using WiMax technology.
"We don't comment on rumors and speculation," said Leigh Horner, a Sprint spokeswoman, when asked about reports appearing in The Wall Street Journal and the German publication Der Spiegel.
One certain development came when Qwest Communications International announced it was dumping Sprint for rival Verizon Wireless. The Denver-based local phone company will begin shifting its wireless customers from service linked to Sprint over to Verizon.
Qwest signed more than 800,000 subscribers for its brand of wireless service running over Sprint's network. Executive discontent grew, though, over limitations that left them without some of the most popular phones and features.
The new five-year arrangement with Verizon will allow Qwest to sell a much broader lineup of phones and high-speed data services.
"It's attractive to Qwest, because we will have the same plans and devices as those offered by Verizon Wireless," said Nicholas Sweers, a Qwest spokesman. "It is our intent to aggressively market and sell Verizon Wireless beginning this summer."
Qwest's contract with Sprint runs through early 2009, so it will be business as usual for Qwest's wireless customers until the transition is complete.
T-Mobile USA is a distant No. 4 in the U.S. wireless industry. If the company owned by Deutsche Telekom, however, can mix its nearly 29 million subscribers with Sprint's nearly 54 million, the new venture will surpass both AT&T and Verizon.
German Finance Minister Peer Steinbrueck on Monday dismissed the possibility of a Deutsche Telekom purchase of Sprint as a rumor, according to a Reuters report. The German government is a major stakeholder in the global conglomerate, which is looking for international expansion opportunities.
A Sprint deal, however, would have to overcome challenges, including U.S. antitrust approval and foreign buyer concerns. Melding multiple network technologies also could be an issue, said Matthew Thornton, an analyst at Avian Securities.
New reports surfaced late Monday that Sprint was considering the sale or spinoff of its Nextel division, essentially further undoing the disappointing 2005 deal that combined the companies in the first place.
Source: The Kansas City Star
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