Nextel Partners

Editor's Corner

Sun, 29 Oct 2006 19:01:39 -0500

Where have all the iDEN customers gone at Sprint Nextel? We see little evidence that Sprint Nextel even has an iDEN business, and that was reflected in the company's dismal third quarter results, which included a 52 percent drop in profits and a spike in churn. Sprint's base of postpaid subscribers actually shrunk by 188,000 because of defections by customers using the Nextel-branded iDEN service. These subscribers, historically the cash cow for pre-merger Nextel, are in fact defecting at an alarming rate. Research firm Technology Business Research (TBR) estimates the operator's Nextel-branded iDEN subscriber base, not counting customers it acquired from Nextel Partners, stands at almost exactly the same point it did when Sprint and Nextel completed their acquisition in August 2005.

Did things get so bad for these customers that they were willing to go to competitors that have inferior push-to-talk technology? For years I've touted the advantages of Nextel's iDEN network, namely a high-quality PTT service with a cult-like following that resulted in industry-leading ARPU. When competitive PTT offerings came on the scene in 2003, they had little impact on Nextel's subscriber base or customer growth. Fast forward to 2006, and Sprint Nextel's story is about Boost Mobile prepaid additions and an apparent de-emphasis on marketing to the enterprise user--the most coveted user in the industry.

Sprint executives told Wall Street after the second quarter's bad results that they were intentionally reducing Boost's rapid growth, partly because its customers were putting a strain on the iDEN network. If forced to choose, they would rather provide good service to existing and new subscribers to the higher-priced Nextel-branded service. Yet, Boost subscribers led the way in the third quarter with 216,000 customers, allowing Sprint to come out with a positive customer growth. All the while, iDEN enterprise users fled.

Sprint is in a bad position going into 2007 as it works with public-safety agencies to reduce interference between its iDEN network and government radios. This rebanding effort is reducing the volume of calls that the iDEN network can handle. In fact, TBR's John Byrne expects Sprint to see continued iDEN defections as it faces network capacity problems in many large U.S. markets in 2007.

Meanwhile, we can also ask where have some of the key former Nextel decision-makers gone? Executive Chairman Tim Donahue and former head of Nextel is stepping down at the end of the year. Considered one of the leading operating executives in the industry, Donahue was the one who breathed new life into Nextel, which was considered doomed to failure just five years ago. One can only imagine his frustration level at the demise of the empire he built. Interestingly enough, Sprint amended CTO Barry West's employment agreement this past summer. West is another star from Nextel. The new employment package provides an incentive for him to stay until February of next year. West is now in charge of Sprint's WiMAX development.

Could this be the end of the Nextel powerhouse?

On another note, check out this article from Wireless Week. It's about mobile-phone analyst guru Herschel Shosteck. Shosteck, who was analyzing the cellular-phone industry even before there were any licensed operators, recently retired from the firm he founded, The Shosteck Group, due to a recurrence of cancer. CEO Jane Zweig will continue to operate the company. I've had the pleasure over the years to interview Mr. Shosteck many times, and I always came away educated and entertained. I wish him a speedy recovery. -Lynnette

Sprint's quarterly results worsen

Wed, 25 Oct 2006 20:01:38 -0400

Sprint Nextel had another bad quarter. The carrier reported worsening results in the third quarter that included a 52 percent drop in profits, a spike in churn and a net loss of 188,000 postpaid subscribers. The carrier's postpaid churn of 2.4 percent increased 30 basis points compared with the second quarter. Compare that to Cingular's 1.5 percent churn rate. More worrisome is the defection rate of iDEN subscribers, those valuable higher spending customers. Research firm Technology Business Research believes the company's Nextel-branded iDEN subscriber base, not counting customers it acquired from Nextel Partners, stands at almost exactly the same point it did when Sprint and Nextel completed their acquisition in August 2005. How much worse are things going to get?

For more about Sprint Nextel's results:
- check out this article from The Wall Street Journal (sub. req.)

ALSO NOTED: Sprint Nextel signs data-roaming deals in Canada and Mexico; Motient sued by largest shareholder; and much more...

Tue, 20 Jun 2006 20:00:41 -0400

> Sprint Nextel signed data-roaming deals with BCE's Bell Canada and Mexico's Grupo Iusacell. Article

> Motient's largest shareholder filed a new lawsuit against the satellite company, alleging a recent transaction regarding mobile satellite service ownership changes violates federal securities law. Article

> The FCC cleared Sprint Nextel's acquisition of Nextel Partners. Article

> Bharti Group, India's largest GSM-based mobile services provider, said it will invest between $1.5 billion and $2 billion annually for the next five years to expand its business at home and abroad. Article

> Telefonica bought British broadband service provider Be Un Limited for $92 million to help it play in the FMC market. Article

> Sony Ericsson showed its first 3G capable i-mode handset, the K610im. Article

And Finally... Public humiliation helped get Sidekick back. Article

Nextel affiliate shareholder wants to hold out

Sun, 30 Apr 2006 20:01:36 -0400

One of the largest shareholders in Nextel affiliate UbiquiTel wants the company to hold out for more money than the proposed $1.3 billion that Sprint Nextel recently said it would pay for UbiquiTel and its 603,000 subscribers. Deephaven Capital Management owns 9.9 percent of the company's common stock and it contends that the proposed figure is inadequate given the price Sprint paid for other larger CDMA affiliates like Alamosa Holdings and iDEN affiliate Nextel Partners.

For more on UbiquiTel and Sprint Nextel:
- read this article from RCRNews

Sprint Nextel buys UbiquiTel for $1.3B

Wed, 19 Apr 2006 20:01:38 -0400

Sprint Nextel agreed to buy one of its affiliates, UbiquiTel, for $1.3 billion. Having affiliate companies fill out its footprint and use the Sprint brand name sure was a good idea for the operator to quickly spread its footprint and allow other companies to carry the roll out cost back in 1998. Now, however, these affiliates are a nightmare for the newly merged Sprint Nextel, significantly jacking up the $35 billion price tag of the merger between Sprint and Nextel. Most of the problems stem from non-compete clauses that Sprint and Nextel have with their affiliates because now the affiliates are independent entities following the merger. The affiliates haven't been happy about negotiating new affiliate deals, which evidently aren't as favorable as their old ones.

We've seen a slew of lawsuits and Sprint Nextel coughed up $3.4 billion in cash for its largest affiliate, Alamosa Holdings, and more than $2 billion for US Unwired, IWO Holdings, Enterprise PCS and Gulf Coast Wireless. Sprint also agreed to pay $6.5 billion to acquire Nextel affiliate Nextel Partners in December. Now it looks like Sprint Nextel will look to avoid more messes by buying out the remaining four affiliates: IPCS, Shenandoah Telecommunications, Swiftel Communications and Northern PCS. On Friday, Shenandoah Telecommunications said it was considering the sale of its wireless operations after failing to settle with Sprint Nextel on a new affiliate agreement.

To read more about Sprint Nextel's purchase of UbiquiTel:
- check out this article from Dow Jones

ALSO NOTED: QUALCOMM and KDDI look into mobile TV; Nextel Partners bought for $6.5M; and much more...

Wed, 21 Dec 2005 19:00:41 -0500

> QUALCOMM and KDDI team up to explore a possible mobile TV business. Article

> Sprint Nextel buys Nextel partners for $6.5 million. Article

> Marconi shareholders approve the Ericsson acquisition. Release

And Finally... Verizon Wireless resurrects an old favorite, Sonic the Hedgehog. Article

Sprint Nextel to buy Velocita Wireless

Tue, 20 Dec 2005 19:01:38 -0500

In a move aimed at enhancing its iDEN network coverage, Sprint Nextel has agreed to acquire Velocita Wireless. The carrier plans to use Velocita's 900 MHz spectrum to supplement the iDEN network it acquired along with Nextel Communications. Velocita's customer base consists of approximately 400,000 business and government subscribers. Terms of the deal, which is set to close in the first half of 2006, were not disclosed. The Velocita buy follows an affiliate purchase, announced on Friday, in which Sprint signed a deal to acquire Enterprise Communications for $98 million.

For more on Sprint's plans for Velocita:
- read this RCR News article

PLUS: Sprint Nextel to complete acquisition of Nextel Partners. Article

Sprint Nextel to buy wireless affiliate for $3.4B

Sun, 20 Nov 2005 19:01:39 -0500

Sprint Nextel is set to buy one of its wireless affiliates for an estimated $3.4 billion in a move to settle outstanding breach of contract issues following Sprint's acquisition of Nextel. The acquisition of Alamosa Holdings is worth a total of $4.3 billion, including $900 million in net debt. Alamosa shareholders will receive $18.75 per share in cash as a result of the acquisition. Alamosa claims to be the largest Sprint Nextel affiliate with 1.48 million direct wireless subscribers. Alamosa shareholders still must approve the acquisition. If the deal goes through, Sprint will have acquired 2.3 million Sprint PCS affiliate subscribers.

In August Alamosa filed a complaint against Sprint Nextel over breach of contract agreements the carrier had allegedly violated following the merger with Alamosa's subsidiary AirGate. Sprint is still in court with affiliate Nextel Partners, which the carrier must also buy. The acquisition is still stuck in the valuation process.

For more on the Sprint Nextel affiliate acquisition:
- read this article from the AP
- check out this press release

Rumor Mill: Cable companies to offer Sprint wireless services

Mon, 24 Oct 2005 20:01:38 -0400

According to a report in The Wall Street Journal, a consortium of cable providers--Comcast, Time Warner and Cox Communications--are nearing a deal to sell Sprint Nextel's wireless services. Unlike Sprint's previous reseller agreements and MVNOs, this service will be sold under the Sprint Nextel brand name. The deal could also see Sprint developing a VoIP hybrid handset that works over the end-user's cable modem in the home and over mobile networks.

The deal could cement the cable companies lead in their race with carriers to deploy a veritable quadruple play of voice, data, video and wireless services. Although Verizon and SBC have launched IPTV trials and mobile TV services, this deal would provide the cable companies with not only a VoIP solution but Sprint's entire mobile offerings. The deal sounds like a big win for cable companies and somewhat cannibalistic on Sprint's part, but if the deal goes through, financial details should clear it up.

For more on the Sprint, cable deal:
- read this article from The Wall Street Journal (sub. req.)
- check out this blog entry

PLUS: Nextel Partners approves Sprint Nextel acquisition. Article

Sprint files second suit against Nextel Partners

Tue, 18 Oct 2005 20:01:37 -0400

Sprint Nextel has filed another suit against Nextel Partners, further muddying the dispute with its affiliate. The second suit seeks a proxy statement from September, forecasts and business plans for 2005 and beyond, agreements relating to the possible change in control for Nextel Communications, and information relating to the hiring of Morgan Stanley. Sprint had requested the documents earlier in the month but claims that Nextel Partners has ignored its request. In the initial suit, Sprint attempted to get a Delaware judge to rule on certain disputes over the process of valuing Nextel Partners, which Sprint may be forced to buy. The companies have yet to reach a consensus on the deal's price tag.

For more on the latest suit:
- take a look at this article from Dow Jones