Sprint Nextel may sell or spin off its Nextel unit, the wireless business that has lost more than 3 million customers since 2006, The Wall...
Sprint Nextel may sell or spin off its Nextel unit, the wireless business that has lost more than 3 million customers since 2006, The Wall Street Journal reported.
Cyren Call Communications, a company started by Nextel founder Morgan O’Brien, is trying to round up investors to purchase the business, the newspaper said Monday, citing people familiar with the matter. The company also is examining other possible partners or a spinoff, The Journal said.
Sprint, the third-biggest U.S. wireless company, posted a $29.6 billion loss last year from writing down the value of the Nextel unit, which saw subscribers defect after complaints about customer service and poor call quality.
Chief Executive Officer Dan Hesse, who took over Sprint in December, said last month that the network could still attract enough users to be profitable.
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“They are grasping at straws right now,” said Craig Moffett, an analyst with Sanford C. Bernstein in New York. He expects Sprint stock to perform in line with its peers. “One thing is painfully clear: that the status quo isn’t working.”
The Journal reported on Sunday that Deutsche Telekom AG may seek to buy Sprint. Such an acquisition, the report said, would make T-Mobile USA, the Bellevue wireless carrier owned by Deutsche Telekom, the largest carrier in the U.S.
Deutsche Telekom and Sprint declined to comment.
Shedding Nextel, acquired for about $35 billion in 2005, may help make the company a more attractive acquisition target, The Journal said Monday.
“It would simplify a purchase of Sprint by Deutsche Telekom,” said analyst Chris Larsen of Credit Suisse in New York. He recommends buying Sprint shares and doesn’t own any.
Adding Nextel would aid McLean, Virginia-based Cyren Call’s plan to build a nationwide wireless public-safety network, The Journal said.
Cyren Call, a for-profit company advising the nonprofit Public Safety Spectrum Trust, is trying to form a group to bid for airwaves, the company said in an e-mailed statement. “All conversations in support of that objective are treated as confidential,” the company said.
Sprint spokeswoman Leigh Horner declined to comment.
In February, Sprint announced that it wrote down the value of Nextel by 80 percent of its acquisition price. Last month, Chief Network Officer Kathy Walker said separating Nextel from Sprint would take longer than the time taken to combine them.
“It’s been an albatross ever since they got it,” Bernstein’s Moffett said. “Pulling it back out is no mean feat.”
move to Verizon
NEW YORK — Qwest Communications International will stop reselling Sprint Nextel’s wireless service and move its subscribers to Verizon Wireless’ network, Qwest said Monday.
The move means Sprint, which is already struggling with a dwindling customer base, will lose more subscribers. Qwest contributed 824,000 to Sprint’s rolls of 53.8 million subscribers at the end of last year.
The news was released after the close of the stock market, on the same day as reports emerged that Deutsche Telekom AG, the parent of T-Mobile USA, was mulling a bid for Sprint and Sprint was considering spinning off Nextel.
Sprint shares rose 83 cents, or 11 percent, to close at $8.72.
Qwest said it had signed a five-year contract with Verizon Wireless that will take effect this summer. Financial terms of the deal were not disclosed.
Present wireless subscribers will receive a free, comparable Verizon Wireless handset, probably in the last three months of this year, said Qwest spokesman Robert Toevs.
Toevs said the Sprint deal “was not right for us.” With Verizon Wireless, Qwest will be able to sell wireless service not just to consumers, but to large corporate and government customers.
The Associated Press