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Sprint, it's time to take the money
Sprint, it's time to take the money
The rumors are rife over acquisition and spin-off scenarios for troubled Sprint. Deutsche Telekom might make a play for Sprint, Sprint may spin off Nextel and Verizon might try to buy Sprint.
The bottom line is: There is no easy fix for Sprint. CEO Dan Hesse recently admitted that the problems facing the operator are more difficult than he anticipated. He's already done a lot internally, cutting 4,000 jobs, reducing the number of distribution points and consolidating the the company's headquarters. Now it's time to make the drastic moves, and one has to be looking for outside investments.
Back in December, Sprint reportedly wouldn't even entertain a $5-billion investment from SK Telecom and PE firm Providence Equity Partners that included installing Sprint's former chairman Tim Donahue as CEO of the company (I have a feeling it was installing Donahue that was the sticking point since former Sprint and Nextel executives love to point the finger at who messed this acquisition up). Now it's time to start courting the PE firms and foreign investors who want a piece of the U.S. wireless market.
Many private equity firms have funds to spend, and they want to spend it in the telecom industry these days. We've seen some high-profile private equity moves in telecom recently, including the buyouts of Covad Communications, Bell Canada and Alltel Wireless.ÂÂ
Analysts predict that with the economy teetering, PE firms will look to telecom carriers and vendors who have high cash flow and manageable debt as new investment opportunities. The beauty of privately led leveraged buyouts is that investment groups have the ability to reshape the business in a manner that previous management and relationships could not and without investors breathing down their necks. These companies have the financial capability to buy other companies that will complement some of these businesses. They can sell non-core businesses and add to the core capabilities. The net result can be a high-value company. -Lynnette
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Posted by Anonymous | March 10, 2008 - 5:34pm
I think you'll find Vodafone the more likely candidate - this will be their last chance to be a serious player in North America. The alternatively is to be slowly forced forced out of Verizon Wireless after the market has already consolidated to 3 or 4 strong national players. Given their stake in Verizon Wireless (45%) is valued between $40-50bn USD and the strength of the £GBP - they could easily acquire Sprint and have change left over... or acquire Sprint & Alltel to move into number one spot. On the technology front they will be no worse off (Sprint / Verizon Wireless both CDMA) with a possible migration to the GSM LTE standard in the near feature. Vodafone has demonstrated its ability to make big acquisitions and make they successful (Turkey / India etc.) - these are the guys to watch.
