Trouble In iDen

August 8, 2008

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Could Sprint be looking to sell its Nextel assets?

In the world of telecom, it is all about subscribers - and how much revenue you can squeeze out of each of them. Investors want growth. But in the saturated mobile industry, carriers need to steal customers from their rivals to meet expectations. At the moment, it looks like Sprint’s troubled Nextel division is among the biggest losers in that battle.

Popular with construction and blue collar workers in the 90’s, Nextel made waves with its unique walkie-talkie like phones (Push to talk or “PTT” for short) based on Motorola’s iDen technology. However, since its take over by Sprint in 2005, Nextel has been in a slow death spiral, losing 2.7 million customers between the 1st and 2nd quarter of this year alone. That’s a big loss by any measure, and an astounding loss for a single quarter. Many in the industry look at Sprint’s $35 Billion dollar purchase of Nextel as a mistake which has blurred the focus and value of both companies.

While a refocus on Nextel’s products and their target marketing might stem or reverse the negative tide, neither Sprint nor their iDen partner, Motorola, seem to be able to concentrate on Nextel through their other distractions.

It is well known that Motorola is likely to spin off of their handset division and has been busy restructuring the company across the board. Sprint has been busy with a “Don’t call it a merger” with SK Telecom and has been focused on how to combat AT&T’s iPhone. And CNBC is reporting that Sprint is looking at a possible sale of its “iDen” business - which essentially means its Nextel network - to either NII Holdings Inc or to private equity investors.

If you can’t fix it, sell it! And it looks like Sprint is trying to do just that.

Written by Todd · Filed Under Mobile, Telecom