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Sprint Nextel ripe for a takeover?

Report on Sprint Nextel says carrier needs to boost management team.

By Denise Pappalardo, NetworkWorld.com, 04/18/07

It’s no secret that Sprint Nextel has been struggling since its $36 billion merger well over a year ago. One analyst firm speculates that the carrier's floundering might even make it a takeover target.

Probe Financial Associates, a research firm that specializes in the carrier market, issued a report Wednesday titled Sprint: Takeover Possibilities and Valuation.

The report examines Sprint’s wireline, traditional wireless and WiMAX businesses, the carrier’s operational performance problems and future possibilities, says Victor Schnee, partner at Probe.

For several months there has been conjecture that Comcast, among others, might be looking to buy Sprint, Schnee says. “Those reports were premature.”

But Schnee says that there are a few factors that could make the takeover talk a reality.

The carrier needs to improve its operational performance, Schnee says. Specifically the company needs to work on high customer churn rates, growing its subscriber base and building its average revenue per user (ARPU), he says.

Another problem that has to be addressed is Sprint’s management team. “Forsee needs to fill the position right below his with a recognized industry leader,” Schnee says. “If Forsee doesn’t bring in someone that inspires confidence and performance doesn’t pick up, Forsee could also be vulnerable.”

While it’s possible another service provider or a private equity firm could take over Sprint, Schnee points out that success may also be in the carrier’s future. “There are not overwhelming odds that there will be a takeover. Sprint is a substantial company that has tremendous resources. If Sprint gets the marketing talent and leadership it needs it can straighten out its problems.”



The big question is for investors... How can we leverage a takeover to benefit us?

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