[Dawg]

Sprint eyes sale of Nextel's iDen network


NEW YORK (Reuters) - Sprint Nextel Corp (S.N) is considering a sale of the Nextel wireless network it bought in 2005, but may have trouble finding a buyer for an asset whose value has plunged about 80 percent to an estimated $5 billion.
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Sprint has struggled to integrate Nextel's iDen network, used by public safety and construction workers, with its own services and has lost millions of customers since paying about $35 billion for Nextel Communications three years ago.

Aside from having to compete with newer network standards than iDen, which has a walkie-talkie feature, any buyer would find it tough to reverse the now-completed integration of the iDen business, including its billing, broadcast towers and customer service, analysts say.

"They spent the last few years trying to integrate it," said Stifel Nicolaus analyst Chris King. "There are a lot of questions that a buyer and the government would have to have."

Sprint, the No. 3 U.S. mobile service, already faces pressure from the U.S. Federal Communications Commission to relinquish a key chunk of iDen wireless airwaves for emergency communications networks.

Bernstein analyst Craig Moffett also noted that iDen technology, developed by Motorola Inc (MOT.N), was being left behind by newer mobile services with broadband Web links.

"It's not exactly a healthy asset. It's a sub-scale narrow- band network that has limited capacity and has a subscriber base that's leaving in droves."

About 14.6 million subscribers, or 28 percent of Sprint's total 51.9 million customers, were exclusively using the iDen network at the end of the second quarter. Another 1.7 million used phones working on both iDen and CDMA networks.

Sprint said in a regulatory filing this week that it was exploring alternatives for iDen that include "improving operations, making additional investments, entering into strategic partnerships and considering potential divestitures."

Sprint included a letter to Keith Cowan, an executive in charge of strategy and development, offering him a $1 million bonus for "the strategic resolution of the iDen network."

CNBC said on Friday that Latin American service provider NII Holdings Inc (NIHD.O), which uses iDen technology, or private equity investors may be interested in the network.

Sprint shares rose 12 percent, also helped by its surprise decision on Thursday to cancel a $3 billion convertible share sale that had been unpopular with shareholders.

Sprint and NII, whose shares rose 0.43 percent, were not immediately available for comment.

POSSIBLE SUITOR

Analysts said it made sense for money-losing Sprint to look for ways to improve its finances, even though it does not face an imminent liquidity crisis. Sprint ended the second quarter with a $23 billion debt, and cash and marketable securities of $3.5 billion.

"Every piece of the business is for sale at a certain price right now because they continue to struggle," said King.

But he noted that an investment in the iDen network, rather than an outright purchase, could make more sense for NII, which operates in countries such as Mexico and Brazil that have faster wireless growth rates than the United States.

The iDen network has faced technical issues Sprint says it has fixed, but customer cancellations have been exacerbated by the weakening U.S. economy and Sprint expects to continue to lose iDen customers in the next few quarters.

In the fourth quarter, Sprint took an impairment charge of $29.7 billion to write off most of the value of Nextel.

Stanford Group analyst Michael Nelson questioned whether Sprint would be able to find a private equity buyer in such a tough credit market.

"Even if they want to sell iDen, I don't think there's a buyer," Nelson added.

Pali Capital analyst Walter Piecyk said in research note that Sprint could attract multiple bidders willing to pay $5 billion or less for the network, without naming suitors.

(Additional reporting by Jessica Hall in Philadelphia, Editing by Derek Caney and Andre Grenon)

[ezrunner]

Wirelessly posted (off to see the wizard)

I'm not surprised by this at all

Thanks for the good read dawg

[NJBlackBerry]

Sprint is in real trouble.
Losing customers every quarter.
Terrible decision to buy Nextel (first having to write off the entire transaction; now a possible sale).
Selling their towers to raise money.
And they cancelled their scheduled preferred stock sale because the prices were low.

Maybe they can sell the iDen network to another US based iDen carrier.

[tel-x.com]

I would love to see the iDEN network stay alive, Shitel.....DONE|
Perhaps google??? Hummmm?

[NJBlackBerry]

Google tends to try and make money... iDen is dying (slowly and painfully). It's just a matter of time.

[juwaack68]

This makes my eye twitch.

My company has about 350 Sprint lines, and over 500 Nextel lines...and we just merged the 2 accounts in their billing system.

Having to rip them apart would be such a PITA.

[NJBlackBerry]

We switched all of our iDen lines (except in Florida) over to Verizon...

[mgerbasio]

Doesn't Sprint have to move iDen from its current 800mHz to the 2.1gHz it was given because of interference with public emergency system radios? If that's the case, whomever gets Nextel would have to build out a new network anyway and my guess is it won't be iDen.

Regards-Michael G.

[southwestcomm]

No. They are moving off certain parts of the 800 MHz where interference is caused due to proximity to public safety freq's. They remain in the 800 and 900 MHz freq's. The 2.5 will be used for WiMAX.