Sprint Close to Buying Nextel

NateDawg writes "After the recent merger of AT&T and Cingular, it looks like Sprint is close to buying out Nextel. According to CNet, the different networks could bring expensive problems, but that could be overcome by the diversity of the company's clients. Nextel has many corporate clients, while Sprint appeals to families and teens."

wall st

[Anonymous Coward]

The Wall Street Journal is reporting that Sprint and Nextel have tentatively agreed to basic terms of a merger. The $36 billion deal would create a third giant cellular carrier with nearly 39 million subscribers. Although Sprint shareholders will retain more than 50% of the combined company, to be called "Sprint-Nextel", the merger will otherwise be mutual. The new company will have a 50-50 split among board members from each company. The new company would spin off Sprint's local landline operations. Nothing has been finalized yet, but the companies are said to be "advanced negotiations", and an official announcement could come next week.

http://www.phonescoop.com/ [phonescoop.com]

Re:Nextel and the art of communication

[Unknown Lamer]

An independent dealer issued the advertising materials and Nextel acted quickly to cut relations with them and stop the advertisements.

Let's get something accurate first...

[sacremon]

AT&T did not merge with Cingular. AT&T Wireless, which had already been spun off from AT&T, merged with Cingular. AT&T is still around as a separate company.

Re:We'll see ...

[Martin Blank]

This is a minority of users. I've used Nextels at two jobs now, and experienced it at two where others used them, and they can be extremely convenient when in places where it's difficult to get a phone set up, and inconvenient to run an earpiece.

In addition, Nextel's PTT (dunno about Verizon's) can be used for group communication, where one person sends a message to multiple people, which can be used to get a response from first available, or just to get a message out to many scattered workers. This is especially useful on construction sites, where, for example, all of the foremen can be contacted in one shot.

Re:We'll see ...

[doi]

You may actually have a good chance for work if this does go through. I worked for Nextel for almost 5 years, and their billing system SUCKED. They changed it about 3 years and $2 billion ago, and from what my old co-workers tell me they're STILL having issues with it. Not to mention that Nextel does all of their development work with contractors and outsource companies now...

Re:Nextel, NASCAR?

[nelsonal]

Just a quick FYI, but outside of the blue states NASCAR is one of the most popular activities in the area. While the millions of people who enjoy the store may not mean a hill of beans to you, they are generally the target market for NEXTEL (who happens to have the highest fees and lowest churn in the industry) so they must be doing something at least a little bit right. Also they are almost as profitable (per sub) as Verizon (who carries a tremendous advantage because of its size).

greater detail

[Anonymous Coward]

http://aolsvc.news.aol.com/business/article.adp?id =20041210203609990007 [aol.com]

Sprint-Nextel deal talk sparks vendor concern
By Sinead Carew, Reuters

NEW YORK, Dec 10 (Reuters) - The prospect of a deal between Sprint and Nextel Communications sparked concerns on Friday about a shrinking U.S. market for mobile network equipment, sending shares of Nextel's key supplier Motorola Inc. down almost 8 percent.

Sprint Corp. is in advanced negotiations to buy Nextel Communications Inc. for more than $36 billion in a mostly stock deal that would combine the No. 3 and No. 5 U.S. mobile providers, according to sources familiar with the deal.

Motorola is the sole network supplier and the main handset supplier to Nextel, and analysts say it has the most to lose as the industry shrinks to four main service providers.

If Sprint and Nextel merge they are expected to operate Nextel's Motorola-based network for another several years but choose technology Sprint uses for future networks.

"Motorola would certainly get a piece of that business on the infrastructure and the handset side but one, it would be a more competitive market so the margins are lower, and two, they would be sharing it," said Deutsche Bank analyst Brian Modoff, who has a "hold" rating on Motorola shares.

Sprint runs a network on standard technology known as CDMA and has plans to start using a faster version next year. Nextel uses Motorola's proprietary iDen technology.

Motorola's President and Chief Operating Officer Mike Zafirovski told an investor conference in San Francisco on Friday that he was confident Nextel would continue to use the Motorola technology known as iDen for the next 2-3 years.

Analysts believe Sprint needs to keep Nextel's network running for several years because Nextel's walkie-talkie style Push-to-Talk feature has a strong following among Nextel's lucrative and loyal business customer base.

CHALLENGES AHEAD FOR MOTOROLA

Nextel has been testing a high-speed technology from a private company called Flarion Technologies. But a Sprint deal would likely mean it does not end up using this technology, at least in the near term, several analysts have said.

Sprint will most likely instead migrate Nextel's customers to CDMA, said Legg Mason analyst Christopher King who believes the pair can save about $2 billion in the next few years by building a CDMA based network for high-speed mobile services.

In the meantime Charter Equity Research analyst Ed Snyder said Motorola is likely to lose out on the equipment side but could win some new business at Sprint by building phones that will work on both the CDMA and iDen networks.

Motorola, the U.S. market leader among handset makers, has been struggling to win back Sprint as a handset customer after being displaced by rivals, including Samsung Electronics Co. Ltd. , in recent years.

Sprint currently uses network gear from Lucent Technologies Inc. , Nortel Networks and to a lesser extent Motorola. A Nextel-Sprint deal could mean more business for Lucent and Nortel.

"In terms of impact on specific vendors. If they combined and went with CDMA that's an incremental positive for Nortel and Lucent and an incremental negative for Motorola," said Tim Daubenspeck of Pacific Crest Securities.

But the mobile network gear industry as a whole will find itself fighting harder for orders from a smaller group of bigger U.S. providers, he said. European countries already only have about three or four large mobile providers each.

Ericsson , the world's biggest mobile network gear maker, recently blamed U.S. consolidation for declining sales. One of its biggest customers, Cingular Wireless , bought another client, AT&T Wireless, in October, shrinking the U.S. market to five national providers.

Daubenspeck said consolidation among service providers could force a merger spree in the