Sprint and Nextel
are in talks to merge into the
third-largest wireless phone carrier, according to a report by the Wall Street Journal Friday.
Spokespersons for Sprint and Nextel had no comment on the story.
According to the WSJ, the merger would top $30 billion and consolidate 75 percent of
the mobile carrier business under three companies — Cingular Wireless, Verizon
Wireless and Sprint/Nextel.
The possible merger of the two companies comes nearly a year after Cingular
Wireless — the BellSouth and SBC
joint venture —
and AT&T Wireless began merger discussions, which came to fruition last month after
the Department of Justice (DOJ) approved
the $41 billion deal.
The Cingular acquisition catapulted it past Verizon Wireless as
the top mobile carrier in the United States.
Kenneth Rehbehn, a principal analyst at research firm
Current Analysis, said he’s heard no more about the merger than what’s been reported on television and in
print, but said there are similarities here with the Cingular and AT&T Wireless
merger this year.
“There are some similar advantages in that Sprint PCS has tended to be more of
a consumer offer, whereas Nextel has been a very powerful business offer because of
the push-to-talk capabilities and a very extensive suite of software applications
and services,” Rehbehn said.
But there are some challenges, he warned. Sprint and Nextel would have to first
negotiate a technology path before the merger could go through, namely the evolution
of Nextel’s platform from Integrated Digital Enhanced Network (iDEN) —
a Time Division Multiple Access (TDMA
the next-generation Code-Division Multiple Access (CDMA
the most likely migration path for Nextel, according to Rehbehn.
This summer, the Federal Communications Commission (FCC)
approved
a controversial spectrum swap with Nextel, with the mobile carrier getting 10
MHz of contiguous spectrum at 1.9 GHz for turning in a portion of 800 MHz,
which is used by public safety agencies.
It was a decision roundly criticized by Verizon Wireless, at least until
Nextel agreed
to forego trademark rights to “push-to-talk,” the name of its popular walkie-talkie
phone service.
Nextel is already familiar with CDMA technology. Two years ago, the company
announced a deal with Motorola and Qualcomm
to develop a push-to-talk technology on the CDMA platform using Qualcomm’s QChat software, which is
interoperable with its iDEN-based service.
The move to CDMA2000 won’t be cheap for Nextel, though, which might
factor into how serious the company is about merging with
Sprint.
“A combination with Sprint would potentially help reduce costs for transport
of voice and data through their backbone because they would be able to take
advantage of Sprint’s facilities; Sprint has an extensive fixed offer from
their ongoing activities as a long-distance carrier,” Rehbehn said. “Secondly,
there’s the potential for bundling with other business services.
“Being combined with an operator that has made as strong a strategic push as
Sprint has towards businesses may help propel subscriber growth beyond your
plumbers and craft people that depend on the push-to-talk,” he added
Sprint is also ramping up its 3G
purchase of $3 billion
worth of equipment from Lucent , Motorola and Nortel
to
bolster its CDMA2000 1x Evolution-Data Only (EV-DO) network.
