Sprint Eyes Sale of Nextel Network

 
 
By Reuters -  |  Posted 2008-08-11 Email Print this article Print
 
 
 
 
 
 
 

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.



 
 
 
 
 
 
 
 
 
 
 

Submit a Comment

Loading Comments...

 
Manage your Newsletters: Login   Register My Newsletters























 
 
 
 
 
 
 
 
 
 
 
Rocket Fuel