Filed under: Analyst reports, Deals, AT and T (T), Sprint Nextel Corp (S)
Sprint Nextel Corp. (NYSE: S) seems to be on the mend from a perception standpoint. CEO Dan Hesse is still running TV advertisements with his direct email address and a personal message to potential Sprint subscribers. The cellular carrier has a refined, electric image and has a decent competitor to Apple, Inc.’s (NASDAQ: AAPL) iPhone. Is it still in bad financial shape? That answer would be yes, as it continues to lose customers every single quarter.
While a Sprint/T-Mobile partnership was rumored this summer, the technology used between the two companies is incompatible. From a layman’s perspective, it’s precisely the problem that doomed the Sprint acquisition of Nextel. To this day, the brands still operate independently in many ways. That’s been a death knell for the company, while more massive competitor AT&T, Inc. (NYSE: T) perfectly merged its network with the now-gone Cingular over a few years. Still, would T-Mobile really want to team up with Sprint? Only if Sprint jettisons the Nextel brand and network sometime in 2008.
Analyst Christopher Larsen with Credit Suisse makes a decent argument for Sprint and Nextel parting ways as soon as possible, citing the recent $3 billion fund raiser Sprint announced. Could an impending corporate divorce be in the works? Sprint has already written off tens of billions in the bungled Nextel merger, but it could raise over $7.5 billion by selling Nextel.
Still, with the third- and fourth-largest wireless players (Sprint and T-Mobile, respectively) ripe for consolidation, combining two very different networks superior work if there’s even a hint of a future combination between the two. But right now, that may be the only choice: Verizon Wireless and AT&T are kicking butt in the wireless market in the U.S.
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