Sprint Eyes Sale of Nextel Network (
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Sprint may have trouble selling Nextel's iDen wireless network. Sprint bought Nextel three years ago for $35 billion, but integration problems have cost it millions of customers, and the Nextel network's value is now $5 billion.NEW YORK (Reuters) - Sprint Nextel Corp is considering a sale of the
Nextel wireless network it bought in 2005, but may have trouble finding
a buyer for an asset whose value has plunged about 80 percent to an
estimated $5 billion.
Sprint has struggled to integrate Nextel's iDen network, used by
public safety and construction workers, with its own services and has
lost millions of customers since paying about $35 billion for Nextel
Communications three years ago.
Aside from having to compete with newer network standards than iDen,
which has a walkie-talkie feature, any buyer would find it tough to
reverse the now-completed integration of the iDen business, including
its billing, broadcast towers and customer service, analysts say.
"They spent the last few years trying to integrate it," said Stifel
Nicolaus analyst Chris King. "There are a lot of questions that a buyer
and the government would have to have."
Sprint, the No. 3 U.S. mobile service, already faces pressure from
the U.S. Federal Communications Commission to relinquish a key chunk of
iDen wireless airwaves for emergency communications networks.
Bernstein analyst Craig Moffett also noted that iDen technology,
developed by Motorola Inc, was being left behind by newer mobile
services with broadband Web links.
"It's not exactly a healthy asset. It's a sub-scale narrow- band
network that has limited capacity and has a subscriber base that's
leaving in droves."
About 14.6 million subscribers, or 28 percent of Sprint's total 51.9
million customers, were exclusively using the iDen network at the end
of the second quarter. Another 1.7 million used phones working on both
iDen and CDMA networks.
Sprint said in a regulatory filing this week that it was exploring
alternatives for iDen that include "improving operations, making
additional investments, entering into strategic partnerships and
considering potential divestitures."
Sprint included a letter to Keith Cowan, an executive in charge of
strategy and development, offering him a $1 million bonus for "the
strategic resolution of the iDen network."
CNBC said on Friday that Latin American service provider NII
Holdings Inc, which uses iDen technology, or private equity investors
may be interested in the network.
Sprint shares rose 12 percent, also helped by its surprise decision
on Thursday to cancel a $3 billion convertible share sale that had been
unpopular with shareholders.
Sprint and NII, whose shares rose 0.43 percent, were not immediately available for comment.
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