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Rumors Abound about Sprint's Possible Future
Rumors of potential acquisition for Sprint swirl with thoughts that Sprint might simply sell its Nextel division---but who would buy it?
Rumors are always gleeful and delicious fun. So we begin today's fest with speculation from Merrill Lynch that Deutsche Telekom which holds its US assets as T-Mobile, USA might consider buying Sprint. Reports of Merrill Lynch's speculation (which appears to be just that) indicate the motivation could be to avoid a costly price war. Merrill Lynch believes that because T-Mobile is considered a low-price leader that it would be most vulnerable to further price reductions by Sprint to maintain market share. And indeed Sprint did just recently announce new all-inclusive prices for unlimited service. Sprint shares are trading in the $7 range. Now Merrill Lynch says it know of no plans to acquire Sprint but…apparently isn't averse to speculating about it.
Meanwhile Seeking Alpha broke news of an entirely different rumor that Sprint had actually hired Morgan Stanley to assist in a spin-off of Nextel. The author, while referencing comment from others discounts this rumor as being perhaps…not too sensible as Nextel's value is clearly depressed currently. I think the interesting thing about these speculations, some of which could clearly be characterized as wild, is just how vulnerable Sprint appears to the marketplace. What I would like to know and I have rarely seen reference to is why Sprint is losing customers at such a high clip at the detail level. Is it technical problems or a lack of fresh handsets on the iDEN Nextel side? Or is it just customer service and pricing problems? Sure part of this can be attributed to AT&T's launch of the iPhone, which is a very popular handset even with its high price. But there are real fundamentals that must be driving Sprint's struggles. What do readers out there think? I would welcome your comments.
Tim Sanders,
TheFinalMile
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tags:
Sprint