Sprint Nextel to Keep Push-to-Talk Network
CEO Daniel Hess calls iDen "a key differentiator for Sprint."
(Stephanie Kuykendal - Bloomberg News)
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Friday, October 31, 2008
Sprint Nextel yesterday appeared to call a halt to plans to sell its iDen push-to-talk network, saying it intends to refocus on the technology it inherited with the company's acquisition of the carrier.
In a statement, Sprint chief executive Dan Hesse said that after careful review of the business, the company has decided to renew its commitment to the technology that is popular among cab drivers and other business users for its walkie talkie capabilities.
"The iDen network is a key differentiator for Sprint, as it allows us to offer products and services no other carrier in the industry can match," Hesse said in the release.
Analysts said the announcement illustrates the difficulty firms face with mergers and divestitures as credit dries up in the economic crisis. They read the statement as a decision to stop Sprint's divestment efforts.
"A year or two ago, money was chasing opportunities. That is no longer the case," said Roger Entner, a senior vice president at research firm Nielson IAG. "The only people interested in buying iDen would be a foreign carrier or private equity, but that is not going to happen in this environment."
Sprint, which has been bleeding customers since its merger with Nextel in 2005, has struggled to revive itself financially and attract new customers. In the firm's second-quarter earnings report last July, Hesse had said that Sprint was exploring alternatives for the iDen network that included improving operations, making additional investments, entering into strategic partnerships and considering potential divestitures.
Some analysts estimated the sale of iDen could bring in as much as $5 billion, cash the company needs to expand its marketing and rollout new technologies to compete with giants Verizon Wireless and AT&T.
When asked about the sale of iDen last Friday during a speech at the National Press Club in Washington, Hesse said that all options were on the table.
Craig Moffett, an analyst with investment firm Sanford C. Bernstein, said the iDen push-to-talk technology used to be attractive for its cost benefits over other wireless service.
"But once all the carriers started offering unlimited calling plans and unlimited texting and e-mail via Blackberries, that value fell away," Moffett said.
