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Is Sprint selling its iDEN business?
During yesterday's second quarter earnings call with investors, Sprint executives tried to gloss over the continued losses to the firm's ailing iDEN network. CEO Dan Hesse remarked that the company is committed to improving service levels on iDEN and that the network is performing at "the best levels ever."
But Sprint executives couldn't hide the fact that customers are still churning from iDEN at a rapid rate. At the end of second quarter, Sprint had 14.6 million subscribers on iDEN, down from 17.3 million at the end of first quarter. And don't be fooled, those iDEN subscribers aren't migrating over to PowerSource (phones that use both iDEN and CDMA). At the end of second quarter, Sprint had 1.7 million PowerSource customers, only slightly up from 1.4 million at the end of first quarter.
During the call, CEO Dan Hesse skirted questions about whether the company would consider selling its iDEN business. Hesse diplomatically said that he would consider all potential offers on the table and not discount any without further review. Clearly something needs to be done to fix the problem and analysts such as Walter Piecyk of Pali Research believe that it's inevitable that Sprint will sell its iDEN network. In fact, Piecyk said that yesterday's announcement by Sprint that it plans to make an offering of $3 billion in cumulative perpetual convertible preferred stock is another sign of iDEN's imminent sale. Piecyk says that the convert deal will offer added liquidity so Sprint can sell iDEN and prevent debt from being transferred to the acquiring company.
If Sprint is preparing to sell iDEN, who would be the potential buyer? I suspect there is an opportunity here for some savvy firm that is willing to cater to the prime Direct Connect customers that Sprint seems unable to maintain. I'm talking about those blue collar professionals that Nextel carefully selected back in the early 90s. Any ideas? --Sue
Comments
I think Sprint needs to whip into shape and service their IDEN customers more effectively. These executives are supposed to be experts at managing a large business, so why aren't they do it?
I have said on many occasions that, operationally, the iDEN side of the house id far more valuable than the CDMA side of the house. I would not be surprised if you find that the iDEN side of the company is populated with primarily with staff that comes from a two way radio background and that the CDMA side is composed primarily of marketing people. Looks like a classif example of preparing to throw the baby out with the bathwater!
Aaron D. Osgood
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First you have Motorola spinning off their handheld division (currently the only manufacturers of iDEN phones), then you have Sprint, rumored to be looking for buyers for the iDEN network.
This is not good for end users of iDEN network.
Sell it. We're having to pay off their debt. If it weren't for Nextel, Sprint wouldn't have as much debt as they do. Iden is an out of date technology, and their TDMA cellular network sucks. Sell it, two-way radio is so 1995.
Whoever wrote that Nextel introduced a massive debt to Sprint needs to check their facts. Nextel had negligable debt prior to the merger, a huge spectrum advantage for 4G and a significant cash store in the bank. iDEN is not a dead technology now just as CDMA will not be a dead technology with the advent of 4G. Both technologies offer significant advantages over the other and have a long life left in them as long as a market continues to exist for them.
There are two facts I have not seen mentioned anywhere. First Dan Hesse, back in the Mid 90's, orchstrated the rise of At&t Wireless, Post purchase by At&t of Linn Broadcasting aka Craig McCaw, into the premiere wireless property at the time. It was so successful that they had to spin it off so it's performance would not be diluted by the parent company. Secondly, you don't turn large corporations on a dime any more than you do a battleship, but once a battleship has turned with all guns to bare look out. To improve churn over 45 base points in a single quarter is an amazing, if not unprecedented thing in the wireless industry. Dan has complete buy in by those of us who run the day to day stuff and we, as a team, are turning the ship. The former Nextel customer service was the best in the industry and that philosophy is back. Customer service has turned a corner and gets better every day and each and everyone of us has become a CS agent. Dan is a very savvy guy and he gets what it takes to make this company work, just keep underestimating us and you will see what "all guns to bare" is all about......sooner than you think.
Overpaid cellphone self acclaimed market gurus take over .. have no idea what Press To Talk (two way) is about.... "instant access" service grade falls...customers leave...simple as that...
The iDen customers were the cream of the crop. They were post paid customers that generally were highly regarded.
Frankly these customers weren't churning like the typical casual or even business (non PTT) customer.
Sprint must analyze the reasons for the significant drop in these types of customers. Is it a lack of customer service, poor quality service, pricing or a combination of the above.
The all you can eat plan is great - but having gone to a myriad of zoning and planning board meeting when Nextel was a name that most people never heard of I can tell you that the potential of iDen is not being fulfilled. Sprint can do better.
I mean c'mon get a grip Sprint executives... you go and buy Nextel, then now only after a short period of time, going to sell Nextel? Jeeze, don't these people go to college? I think many executives make things too complicated... they need to start thinking in simple terms if they can't seem to grasp the concept. 1). Provide excellent customer service, 2). Get those techs out there and improve the network, don't just ignore your IDEN customers ... and uh, these could've been done in about 6 months top, but no, it has to take 5 years just to get your company back into shape.
The comment that said it was Nextel’s fault for Sprint debt problems made me laugh. And if so why sprint executives bought Nextel? As an ex employee of Nextel and under the leadership of Tim Donahue and Paul Saleh Nextel has cash flow and great churn rate it has always beaten Sprint PCS with performance metrics. I think the reason that Sprint has problems is you have merged company with different cultures with people with different. I think Sprint did the damage on iDEN network reputation. And to say CDMA is superior to iDEN . think about what GSM can do to CDMA based on Subscribes world wide. I see CDMA dead technology as well.
One of the main issues facing the IDEN technology is its inability to do data at the transfer rates of CDMA. The world is changing rapidly and it is changing to high speed data. With the ability at best to do speeds of 19.2 it is like using dial up service in a broadband world.
In the near future we will probably see where all phones will have the ability to use two way service via software downloads.The speeds the quality and the networks are and will be more robust than IDEN will ever be. Reality is that Beep Beep is not the best form of communication in our new business world. Braek the habit and increase your productivity.
What's the problem. TDMA is on same platform as GSM. Why is GSM able to come of age and compete with the others. It would be a lot more cost effective then to sell Sprint if it upgraded their cell sites to accommodate future 3G enhancements. Motorola seems to be the villain here. There has not been any RD on the IDEN Platform, nor any plans are in the works.
Like the article said iDEN is for "blue collar" business; however, costomers still want the high speeds of CDMA. The problem is the Hybrid iDEN/CDMA phones are bulky and crap. Sprint will intentionally not produce a hybrid Smartphone or Blackberry, because they don't want you to use iDEN. I like many others need PTT (iDEN) but are forced to use crap - those that do not NEED PTT simply switch. For those who don't understand why people need PTT: We need to get in touch with our workers - for a worker it is easy to ignore a ringtone, but hard to ignore your supervisor's voice coming directly through your phone.
I believe that iden is on its way out. The only way they could possible keep it is by replacing the whole network. It doesn't have the reliability of CDMA. The new hybrid phones produced by sanyo and lg are also garbage. I used nextel phones for my business for about 8 years. I quickly switched to all blackberrys. Everyone communicates by either text or voice. I find it a great way to communicate. Everyone has a record of what they need to do. Iden breaks up halfway trough a conversation, requiring you to repeat the same thing four times. I am willing to bet iden is gone in a few years.
I believe that iden is on its way out. The only way they could possible keep it is by replacing the whole network. It doesn't have the reliability of CDMA. The new hybrid phones produced by sanyo and lg are also garbage. I used nextel phones for my business for about 8 years. I quickly switched to all blackberrys. Everyone communicates by either text or voice. I find it a great way to communicate. Everyone has a record of what they need to do. Iden breaks up halfway trough a conversation, requiring you to repeat the same thing four times. I am willing to bet iden is gone in a few years.
I think Southern Linc buying Nextel would be beneficial to both companies. This would allow Sprint to pay down on their debt and focus on CDMA based products and technologies. For Southern Linc, it would allow them to expand their current southeast footprint and help become a national provider using the iDen Network. Southern Linc has been using this technology for roughly as long as Nextel so it wouldn't be something new for them.
Why does everyone think that Iden is out and cdma is in? The more I turn the same people still have the Nextel service. They just want a better service. I believe more people would have Nextel service if sprint actually expanded it's network. If VZW, Sprint, ATT are all trying to upgrade and compete with PTT, how is it on its way out? Its old technology that everyone still seems to love and the fastest, more reliable PTT. It just needs the coverage. If people are saying its the "blue collar" workers that use it. They need coverage and faster data not to be ignored. Im sure there is more blue collar workers out there then white. Upgrade to your blackberry, they probably be bought out by Motorola anyways. Look at the stocks for RIM, there coming down and Motorola could protentially purchase them. Even if that's a long shot, Nextel shouldn't be on the way out. It should be expanded before it loses customers that prefer it, it could potentially be a excellent company that everyone could love.
There are so many reasons why a lot of people have gave up their push-to-talk phones. The main reason in my opinion is the tanking economy has affected Sprint the most. Some people are getting tired of the intrusions of others. You get people bothering you and alerting and they can talk straight through to you. It gets annoying sometimes. Stiff competition from AT&T's IPhone and some of Verizon's cellular offerings too. There are other reasons like some in the above posts. You keep saying that IDEN technology is old - (less than 20 years in existence is old???) I don't believe the PTT technology is fading away. Look - AT&T, Verizon, Sprint, iPCS, SouthernLinc and I guess some other partners use some form of Push-to-talk service. It could be to the point of over saturation. Some consumers do not know the benefits and advantages of the service. They think it is only for business. In fact is for leisure and personal enjoyment too. You have to understand Nextel's PTT service is instant communication. Once you press the button it connects you to the other person in under a second any where there is service on the Nextel National Network. It has its advantages in natural disasters and for first responders with emergencies. They definately do not want the lights dimmed concerning this service. It has been critical in major hurricanes. Let's improve the clientele and explain to them the benefits and let them know it's not just for business. Bad press plagues the company. Would you get cell phone service from a company that is brunt of negative news all the time??



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