Tech sector geeks: is the proposed Nextel/Sprint merger a good thing? - Page 3

JimNasium · 12-10-2004, 08:04 AM

I'm a Sprint PCS customer but don't know enough about such things to make an informed opinion.

Story

December 10, 2004
Nextel Said to Be in Talks With Sprint
By ANDREW ROSS SORKIN and KEN BELSON

Nextel Communications is in advanced talks to merge with the Sprint Corporation, according to executives involved in the negotiations. The deal would form the third largest cellphone company in the nation, with 39 million wireless subscribers.

A deal could be reached as early as next week if the talks continue apace. In the meantime, the talks may bring to the game a third player, Verizon Wireless, which held several internal conference calls yesterday to discuss the possibility of making a run at Sprint, executives close to Verizon Wireless said.

Whatever the outcome, the industry appears ready to shrink once again, just six weeks after Cingular's acquisition of AT&T Wireless formed the largest mobile phone provider in the country with 46 million subscribers, surpassing Verizon Wireless with 42 million. The talks between Sprint, currently No. 3 in the market, and Nextel, No. 5, are also in part a response to Cingular's move, which forced other rivals to reconsider their competitive positions.

A merger of Sprint, which provides wireless service and traditional fixed-line service, and Nextel, best known for its push-to-talk walkie-talkie feature and loyal business customers, would marry two very different businesses and an assortment of overlapping and conflicting technologies.

Executives close to the Nextel-Sprint negotiations say the talks are at a particularly delicate point and may well collapse. The negotiations took on a sense of urgency in recent weeks because the market valuations of the companies had become more aligned - Nextel and Sprint had each been worth about $31 billion - allowing for the possibility that the companies could call the deal a merger of equals and take advantage of certain tax efficiencies.

But yesterday, as shares of Nextel and Sprint rose significantly after the negotiations were reported on CNBC, the executives said that they had begun to worry that the talks might fall apart because Nextel's market value was now about $32 billion and Sprint's had jumped to $36 billion. Shares of Nextel, which rose 6.6 percent, closed at $29.81. Shares of Sprint rose 7.9 percent, closing at $24.28.

When comparing wireless units, Nextel is the more valuable carrier. Though it has eight million fewer subscribers than Sprint, Nextel's customers pay nearly 10 percent more each month. Nextel's customer turnover rate - a crucial industry gauge - is half that of Sprint's. Nextel is also more profitable than Sprint. Almost one-quarter of Sprint's 23 million customers come from wholesale agreements with resellers like Virgin Wireless, and more than half of Sprint's revenue still comes from its shrinking fixed-line services.

The merger talks, which have been on and off for years, resumed in earnest last month after federal regulators moved closer to resolving the thorny problem of Nextel's radio spectrum, some of which overlaps with airwaves used by public service agencies, the executives said.

The Federal Communications Commission said that it wanted to give Nextel 10 megahertz of valuable 1.9-gigahertz spectrum in return for abandoning other spectrum it holds. Nextel will also have to pay several billion dollars to help public agencies take over its older spectrum. The offer, which Nextel has not yet approved, lifted a cloud of uncertainty which had hung over the company.

"It's no coincidence that things are heating up now that spectrum swap is getting done," said Jonathan Schildkraut, an analyst at SG Cowen & Company. "No one wanted to inherit the uncertainty."

Nextel has been an unusual player in the wireless phone industry. Unlike the other major wireless companies, it has built its network using 700-, 800- and 900-megahertz radio spectrum. For the most part, the rest of the industry, including Sprint, uses 1.9-gigahertz radio spectrum. That difference has forced Nextel to rely on its own network technology, which is not used by its competitors. Its technology is less able to provide high-speed data services that are seen as the future of the industry.

As Nextel moves into the 1.9-gigahertz spectrum, it will need to upgrade its network; in the event of a merger with Sprint, that technology would need to be compatible with Sprint's.

Roger Entner, a telecommunications industry analyst with the Yankee Group, a market research firm, said Nextel, if it merged with Sprint, "would not have to build that network all over again." Moreover, he argued, the two companies have complementary customer bases, because Sprint is stronger in the consumer market and Nextel is the best in the industry at serving businesses. "Sprint has cracked the code reasonably well on consumers and Nextel on business," he said, adding that the idea the two companies would merge is "a plausible story."

Still, a deal would have to overcome enormous hurdles. The combined company would most likely have to spin off or sell Sprint's traditional landline business, a potentially complicated process of breaking off pieces of the company. The combined company would also have to develop more wireless phones that work on both networks.

Matt Richtel, in San Francisco, contributed reporting for this article.

**morphius** · 12-10-2004, 12:05 PM

Quote:

Originally Posted by HC_Chief

Yeah, Sprint leaving KC would also lead to Block, HNTB, Bibb & Associates, and a host of other headquartered Fortune 500/1000 companies leaving.

Or did I just forget to put on my 'drama queen' undies today?

How many fortune 500 companies are HQ'd in KC?

Well it destroy the city, heck no, but it wouldn't be replaced anytime soon either.

jynni · 12-10-2004, 12:57 PM

Quote:

You must not live near the campus. How stupid is it that coverage drops at pretty much every major intersection near the CORPORATE HEADQUARTERS?!

I've worked at the Campus for almost four years and have never had a problem with coverage or dropped calls. I also spend a great deal of time shopping in the Town Center area and have never had a problem.

I don't understand why people think coverage should be so good on and around the campus. Given that more than 10K people work there and probably about half have Sprint phones, it's gonna clog the network. Also when you consider the general cell phone use in Johnson county, it's a miracle that anyone call complete a call.

As for bad management, intra office politics and such, I have encounted the same type of stuff at every single place I've worked. From the IRS to Pottery Barn to Worlds of Fun.

Sprint has some of the better phones - try to stay with the Sanyo ones though, they are they best. Samsung seems to be hit and miss although they seem to be better as of late.

KC Jones · 12-10-2004, 12:58 PM

Quote:

Originally Posted by morphius

How many fortune 500 companies are HQ'd in KC?

Well it destroy the city, heck no, but it wouldn't be replaced anytime soon either.

2, and Sprint is one of them. KC will take a major step backwards once Sprint finally deals with their flailing business and has massive layoffs. I seriously doubt they leave the OP campus altogether though.

I've been waiting for the other shoe to drop at Sprint for a while now. I will most likely accelerate my plans to go from consulting to a perm position with this on the horizon.

BTW, the other one is Farmland IIRC

OOPs - I thought HRB and IBC didn't make the list this year but according to wikipedia they are on the 2004 list. So we have 4 in the area.

**Saulbadguy** · 12-10-2004, 01:07 PM

So which one will be the bitch and which one will be the butch?

KC Jones · 12-10-2004, 01:09 PM

Quote:

Originally Posted by Saulbadguy

So which one will be the bitch and which one will be the butch?

Sprint had 26Billion in revenue to Nextel's 10, so probably Sprint.

StcChief · 12-10-2004, 01:23 PM

Sounds like a good merger to me.
I have had Nextel for 3 years. Great coverage, Cust serv.

The phones are industructable. Really double cased Motorala's . Since Motorola invested heavy in the network.

The future Nextel network upgrade could be interesting for customers

Had Sprint before good luck there. Phones were iffy.

Verizon was a POS for coverage and service.

HC_Chief · 12-10-2004, 01:48 PM

115th & Metcalf = dead spot (that's an entrance to the campus, BTW)
College & Antioch = dead spot
College & Nall = dead spot

Phone = Sanyo SCP-5150

I worked there for two years... every person in my group had calls drop in the same area(s). Rumor has it former CEO Esrey had a relay installed in his attic because he couldn't get shit for coverage. 50% of the drive to Des Moines = analog roam.

Sprint's coverage network sucks. I'm switching as soon as my contract expires (probably T-Mobile or Cingular... friends with those report much better/wider coverage areas with less roaming & fewer drops)

Besides, Sprint is run by fuqtards.

**BigRedChief** · 12-10-2004, 01:51 PM

Quote:

Originally Posted by KC Jones

Sprint had 26Billion in revenue to Nextel's 10, so probably Sprint.

YeaH I don't see how Sprint can be anything but the big dog here in this deal.

beavis · 12-10-2004, 02:01 PM

Quote:

Originally Posted by BigRedChief

Sprint is the engine that powers the KC economy. We are not just talking about 35k losing their jobs we are talking about the other jobs being lost where those 35 k spend their sprint money. All the local companies that supply sprint with the supplies it needs. Sprint leaving would devestate the KC economy.

Geez, a little dramatic are we? I think overestimate the influence one company has on a substantial metropolitan area. Besides, you are probably getting in a tizzy over nothing. I doubt there would be a ton of jobs lost over this. Sprint is the one doing the buying here.

beavis · 12-10-2004, 02:02 PM

Quote:

Originally Posted by KC Jones

2, and Sprint is one of them. KC will take a major step backwards once Sprint finally deals with their flailing business and has massive layoffs. I seriously doubt they leave the OP campus altogether though.

20k over the course of two years, almost 25% of their workforce isn't massive layoffs?

HC_Chief · 12-10-2004, 02:05 PM

lol, no doubt.

Sprint = big-name corporation that brings big bucks to Overland Park (KC Metro), but they aren't the only game in town... not by a long shot. Hell, I'd wager over half the IT pros in KC have worked for Sprint at one time or another.... and no longer work for them.

Sprint is a high-tech company run by myopic morons. If ever there were a 'top-heavy' corporation, Sprint is it.

beavis · 12-10-2004, 02:09 PM

Quote:

Originally Posted by HC_Chief

Sprint is a high-tech company run by myopic morons. If ever there were a 'top-heavy' corporation, Sprint is it.

The people that are there now (I'm sure you know who I'm talking about) are just hatchet men. They aren't in it for the long haul. Just whack as many heads as possible without a glut of lawsuits, collect their golden parachute, and get the **** out.

HC_Chief · 12-10-2004, 02:12 PM

Quote:

Originally Posted by beavis

The people that are there now (I'm sure you know who I'm talking about) are just hatchet men. They aren't in it for the long haul. Just whack as many heads as possible without a glut of lawsuits, collect their golden parachute, and get the **** out.

Sure, and why not? Esrey embezzled how many millions? And then they gave him a HUGE multi-million dollar 'retirement package'?!

If it weren't for foresight in the 70s, that company would be long-dead by now. (foresight being the all-fiber network they installed, nation-wide)

**BigRedChief** · 12-10-2004, 02:14 PM

Quote:

Originally Posted by beavis

Geez, a little dramatic are we? I think overestimate the influence one company has on a substantial metropolitan area. Besides, you are probably getting in a tizzy over nothing. I doubt there would be a ton of jobs lost over this. Sprint is the one doing the buying here.

You have your opinion and the economist's in the KC area have another.

beavis · 12-10-2004, 02:14 PM

Quote:

Originally Posted by HC_Chief

Sure, and why not? Esrey embezzled how many millions? And then they gave him a HUGE multi-million dollar 'retirement package'?!

If it weren't for foresight in the 70s, that company would be long-dead by now. (foresight being the all-fiber network they installed, nation-wide)

The life an executive must be rough.

12-10-2004, 08:04 AM
JimNasium Voodoo Chile Join Date: Jan 2001 Location: At the crossroad Casino cash: $2913902	Tech sector geeks: is the proposed Nextel/Sprint merger a good thing? I'm a Sprint PCS customer but don't know enough about such things to make an informed opinion. Story December 10, 2004 Nextel Said to Be in Talks With Sprint By ANDREW ROSS SORKIN and KEN BELSON Nextel Communications is in advanced talks to merge with the Sprint Corporation, according to executives involved in the negotiations. The deal would form the third largest cellphone company in the nation, with 39 million wireless subscribers. A deal could be reached as early as next week if the talks continue apace. In the meantime, the talks may bring to the game a third player, Verizon Wireless, which held several internal conference calls yesterday to discuss the possibility of making a run at Sprint, executives close to Verizon Wireless said. Whatever the outcome, the industry appears ready to shrink once again, just six weeks after Cingular's acquisition of AT&T Wireless formed the largest mobile phone provider in the country with 46 million subscribers, surpassing Verizon Wireless with 42 million. The talks between Sprint, currently No. 3 in the market, and Nextel, No. 5, are also in part a response to Cingular's move, which forced other rivals to reconsider their competitive positions. A merger of Sprint, which provides wireless service and traditional fixed-line service, and Nextel, best known for its push-to-talk walkie-talkie feature and loyal business customers, would marry two very different businesses and an assortment of overlapping and conflicting technologies. Executives close to the Nextel-Sprint negotiations say the talks are at a particularly delicate point and may well collapse. The negotiations took on a sense of urgency in recent weeks because the market valuations of the companies had become more aligned - Nextel and Sprint had each been worth about $31 billion - allowing for the possibility that the companies could call the deal a merger of equals and take advantage of certain tax efficiencies. But yesterday, as shares of Nextel and Sprint rose significantly after the negotiations were reported on CNBC, the executives said that they had begun to worry that the talks might fall apart because Nextel's market value was now about $32 billion and Sprint's had jumped to $36 billion. Shares of Nextel, which rose 6.6 percent, closed at $29.81. Shares of Sprint rose 7.9 percent, closing at $24.28. When comparing wireless units, Nextel is the more valuable carrier. Though it has eight million fewer subscribers than Sprint, Nextel's customers pay nearly 10 percent more each month. Nextel's customer turnover rate - a crucial industry gauge - is half that of Sprint's. Nextel is also more profitable than Sprint. Almost one-quarter of Sprint's 23 million customers come from wholesale agreements with resellers like Virgin Wireless, and more than half of Sprint's revenue still comes from its shrinking fixed-line services. The merger talks, which have been on and off for years, resumed in earnest last month after federal regulators moved closer to resolving the thorny problem of Nextel's radio spectrum, some of which overlaps with airwaves used by public service agencies, the executives said. The Federal Communications Commission said that it wanted to give Nextel 10 megahertz of valuable 1.9-gigahertz spectrum in return for abandoning other spectrum it holds. Nextel will also have to pay several billion dollars to help public agencies take over its older spectrum. The offer, which Nextel has not yet approved, lifted a cloud of uncertainty which had hung over the company. "It's no coincidence that things are heating up now that spectrum swap is getting done," said Jonathan Schildkraut, an analyst at SG Cowen & Company. "No one wanted to inherit the uncertainty." Nextel has been an unusual player in the wireless phone industry. Unlike the other major wireless companies, it has built its network using 700-, 800- and 900-megahertz radio spectrum. For the most part, the rest of the industry, including Sprint, uses 1.9-gigahertz radio spectrum. That difference has forced Nextel to rely on its own network technology, which is not used by its competitors. Its technology is less able to provide high-speed data services that are seen as the future of the industry. As Nextel moves into the 1.9-gigahertz spectrum, it will need to upgrade its network; in the event of a merger with Sprint, that technology would need to be compatible with Sprint's. Roger Entner, a telecommunications industry analyst with the Yankee Group, a market research firm, said Nextel, if it merged with Sprint, "would not have to build that network all over again." Moreover, he argued, the two companies have complementary customer bases, because Sprint is stronger in the consumer market and Nextel is the best in the industry at serving businesses. "Sprint has cracked the code reasonably well on consumers and Nextel on business," he said, adding that the idea the two companies would merge is "a plausible story." Still, a deal would have to overcome enormous hurdles. The combined company would most likely have to spin off or sell Sprint's traditional landline business, a potentially complicated process of breaking off pieces of the company. The combined company would also have to develop more wireless phones that work on both networks. Matt Richtel, in San Francisco, contributed reporting for this article.
Posts: 6,874

12-10-2004, 01:07 PM	#34
Saulbadguy When a nightmare becomes real Join Date: Nov 2003 Casino cash: $2646966	So which one will be the bitch and which one will be the butch?
Posts: 46,965

12-10-2004, 01:23 PM	#36
StcChief Playing for #1 Draft Pick Join Date: Oct 2003 Location: Just West of Lambs land Casino cash: $10004900	Sounds like a good merger to me. I have had Nextel for 3 years. Great coverage, Cust serv. The phones are industructable. Really double cased Motorala's . Since Motorola invested heavy in the network. The future Nextel network upgrade could be interesting for customers Had Sprint before good luck there. Phones were iffy. Verizon was a POS for coverage and service. __________________ sig test for this screwy schema
Posts: 25,901

12-10-2004, 01:48 PM	#37
HC_Chief That's just f***in' stupid Join Date: Aug 2000 Location: suburbia Casino cash: $3687107	115th & Metcalf = dead spot (that's an entrance to the campus, BTW) College & Antioch = dead spot College & Nall = dead spot Phone = Sanyo SCP-5150 I worked there for two years... every person in my group had calls drop in the same area(s). Rumor has it former CEO Esrey had a relay installed in his attic because he couldn't get shit for coverage. 50% of the drive to Des Moines = analog roam. Sprint's coverage network sucks. I'm switching as soon as my contract expires (probably T-Mobile or Cingular... friends with those report much better/wider coverage areas with less roaming & fewer drops) Besides, Sprint is run by fuqtards. __________________ "Gentlemen, you can't fight in here, this is the war room!"
Posts: 12,355

12-10-2004, 02:05 PM	#41
HC_Chief That's just f***in' stupid Join Date: Aug 2000 Location: suburbia Casino cash: $3687107	lol, no doubt. Sprint = big-name corporation that brings big bucks to Overland Park (KC Metro), but they aren't the only game in town... not by a long shot. Hell, I'd wager over half the IT pros in KC have worked for Sprint at one time or another.... and no longer work for them. Sprint is a high-tech company run by myopic morons. If ever there were a 'top-heavy' corporation, Sprint is it. __________________ "Gentlemen, you can't fight in here, this is the war room!"
Posts: 12,355