Sprint Decides To Keep Nextel After Potential Deal Unravels


Sprint will keep Nextel after all. After shopping Nextel around to potential buyers earlier this year, the struggling carrier said in a statement they would “retain and rejuvenate this important asset.” It also announced that it was continuing its partnership with Motorola (NYSE: MOT) to provide network and infrastructure support as well as handsets for the iDen network.

It’s an understatement to say that the 2005 merger of the two companies has been something of a disaster. Sprint has struggled to integrate the two, and has watched as subscribers–mostly from Nextel—fled the carrier. Still, the WSJ reports that Sprint was able to drum up interest from a few companies, including PE firm Cerberus Capital Management and Latin American operator NII Holdings. But the credit crunch made it difficult to raise the cash for the deal, which was just over $5.4 billion–a valuation that analysts questioned, given market conditions. Citing “people familiar with the situation’, the WSJ said that some potential buyers offered less, “essentially asking Sprint to compensate them to take on Nextel.” Sprint paid $35 billion for the company.

So how will Sprint revive the network? Dan Hesse said in his statement that Nextel’s push-to-talk, or walkie-talkie technology is a “key differentiator” for Sprint (NYSE: S). Next week, Sprint will launch the Motorola i576 on Nextel, and later this year, the Blackberry Curve. It also plans to launch eight new handsets in the first half of 2009 and will refocus youth-oriented prepaid service Boost to compete aggressively with a lower per-minute rate compared with rivals (release).

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