Talk of Returning Headquarters to Kansas Ripples Through Sprint

By Kim Hart
Washington Post Staff Writer
Saturday, October 13, 2007

For more than a year, leaders of Sprint Nextel have discussed the possibility of relocating the company's headquarters from Reston to Sprint's longtime home in Kansas, according to two former executives.

But talk that had been confined to executive offices spread throughout the workforce this week, when the Wall Street Journal reported that Gary D. Forsee had broached the idea when he resigned as Sprint's chairman and chief executive.

Sprint spokeswoman Leigh Horner said the question of a headquarters move is "not an issue the board has on the table right now."

And on an internal Web site designed to help employees during the transition to new management, acting chief executive Paul Saleh discounted the rumor.

But talk of moving the headquarters from Reston to Overland Park, Kan., has been swirling for months, say former Sprint executives familiar with the discussions, who spoke on the condition of anonymity because they still have business relationships with the company.

The company currently has two command centers. The executive headquarters is in Reston, while its operational headquarters remains in Kansas. Integrating Sprint and Nextel has proved to be difficult, causing some in the company to wonder if consolidating operations at a single location would smooth the transition, these people said.

Establishing executive offices in Reston was part of the merger agreement when Sprint purchased Nextel two years ago. Nextel had grown up in Northern Virginia, and some board members thought maintaining that presence was crucial to the future of the combined company, which was shifting its focus from traditional telephone lines to wireless operations.

At the time of the merger, top executives also said they did not want to uproot employees. Nextel employees were reluctant to move to the Midwest, and Sprint folks wanted to avoid the high cost of living of the Washington area.

So the executive headquarters was built along the Dulles Toll Road, while the operational headquarters remained in Overland Park. Forsee and Saleh, then chief financial officer, had offices in Reston, while many other top executives stayed in Kansas.

The split setup contributed to the difficulty of integrating the two companies, some analysts say. Despite having executives in Reston, "the heartbeat of the company was still in Kansas," said one former executive.

Sprint, which has Kansas roots dating to 1899, has for decades been the largest employer in the Kansas City metropolitan area. The company occupies a 200-acre office complex that resembles a large college campus.

Of the 58,600 people employed by the company, 13,000 are in Overland Park. About 4,300 people work in the Washington area.

"One advantage to moving the headquarters is that they already have more employees there," said Christopher King, an analyst who covers the company for Stifel Nicolaus, an investment research firm in Baltimore. "But they may have more trouble attracting talent."

Northern Virginia business boosters note that Sprint's presence in the region has spurred other wireless-related start-ups to locate nearby. Several of those ventures have been launched by former Nextel employees.

"Nextel is a homegrown company, and with it then becoming Sprint, it means a lot to this community to have those people here. Hopefully that will continue," said Mark Looney, chairman of the Reston Chamber of Commerce.

Even if Sprint's headquarters does return to Kansas, former employees and analysts expect the company would continue to have a sizable workforce here to be close to federal agencies and regulators.

Analysts say a decision on a headquarters location could be fairly low on the list of priorities for new management, who will first have to figure out how to stem the bleeding of cellphone subscribers leaving for Sprint's larger rivals.

"What they do is probably more important than where they do it," Looney said.

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