Sprint Merger Would Be Hard to Undo, Officer Says

By Crayton Harrison
Bloomberg News
Thursday, March 13, 2008

Sprint Nextel, the wireless carrier formed by the merger of Sprint and Nextel Communications in 2005, could not easily be split up again, chief network officer Kathryn A. Walker said yesterday.

Separating operations would take longer than integrating them, Walker said at a Bear Stearns conference in Palm Beach, Fla. Sprint trained technicians to work on both companies' technologies and has combined network-monitoring operations, she said.

About 1.2 million customers canceled their contracts with Sprint last year, many of whom complained about poor service and dropped calls. The former Nextel network made up about one-third of Sprint's customers at the end of last year, compared with about 40 percent when the companies combined.

"With everything we've done, it'd probably take longer to undo it," Walker said, responding to a question about what it would take to split up. "Taking that integration plan and reverse-engineering it would be the way we would look at it."

While Sprint has integrated many of its operations with Nextel's, it still runs networks that don't overlap much, Walker said. Sprint, based in Overland Park, Kan., has combined network technology in about one-tenth of its wireless sites, with the rest dedicated solely to one system or the other.

Selling the former Nextel network would be difficult because there are no buyers, Lehman Brothers analyst Thomas Seitz wrote last month in a research note.

"We cannot think of a scenario where someone would want to re-enter the market as a fifth national player and heat up what is already a very competitive market," Seitz wrote. Instead of breaking up the company or shutting down the Nextel network, Sprint should try to stem subscriber losses to boost its share price, Seitz wrote.

Sprint may detail spending plans for a new network when the company reports first-quarter results, Kurt Fawkes, vice president for investor relations, said yesterday. The Xohm network, using WiMax technology, will offer faster Internet connections for applications such as music and video downloads.

The company scrapped an agreement last year with Clearwire to share the cost of building a network that would have reached as many as 100 million people.

"We're looking at some different types of arrangements on Xohm, so stay tuned on that one," Fawkes said.

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