05/05/2008, 4:30pm, EDT
Monday, May 5thSprint mulls Nextel sell-off, WiMAX team-up
Sprint is strongly considering selling off its Nextel division after just three years folded into the company, the Wall Street Journal says while crediting anonymous sources. One of Nextel's founders, Morgan O'Brien, is purportedly creating a group of investors that would buy out the push-to-talk group and restore its place as a separate company. Other private companies are also an option, as is a spin-off similar to the landline Internet provider Embarq.
The move is allegedly still distant but is seen as potentially crucial by Sprint, which has watched as the subscriber base for Nextel's iDEN phones has dropped substantially since the 2005 merger of the two companies. These customers account for about 13.2 million of Sprint's subscriber base but may be cut to as little as five million users by 2010, the alleged source says while citing internal predictions.
A sell-off of Nextel would render Sprint more vulnerable to a rumored takeover by T-Mobile, which could afford to pay less for the resulting company and would not be forced to either support or migrate Nextel users. A combined T-Mobile and Sprint would become the third-largest US carrier and would become a major rival to AT&T.
Separately, the Journal's sources also claim that rumors of a WiMAX pact between Sprint and multiple other companies is valid. The company is set to reunite with partner Clearwire on a deal and will also accept combined investments of $3 billion from Google and Intel to help build out its Xohm WiMAX Internetservice. Other contributors, such as Comcast, have been rumored but not confirmed in the latest report.
Filed under: industry
Other story tags: Intel, Google, sprint, WiMAX, Comcast, Clearwire, Nextel
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A side hit from a sale would result in customers of Boost Mobile, a subsidary of Sprint Nextel that provides prepaid cellular service as a MVNO on Sprint's iDEN network, being shuffled around to the new owner. This could potentailly break in-network mobile-to-mobile deals with Sprint Nextel, as well as cause other changes for Boost customers.