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Analyst says board likely to revive Nextel
By Chris Fournier
Bloomberg News
Published on Wednesday, May 07, 2008
Sprint Nextel Corp. could get as little as $5 billion if Chief Executive Officer Dan Hesse opts to sell the Nextel business, a fraction of the $36 billion the wireless carrier paid in 2005, according to Cowen & Co.
Sprint might seek to spin off or sell the division, the Wall Street Journal reported, citing people familiar with the matter. The company, which bought Nextel Communications Inc. three years ago, might sell Nextel for $5 billion to $8 billion, New York-based analyst Tom
Watts said.
Shedding the unit, which cost Sprint almost $30 billion in writedowns last year, could make Sprint a more attractive acquisition target, according to analysts including Deutsche Bank's Greg Miller. The move also would help Hesse focus on Sprint's own network, which avoided the customer-service and quality complaints that plagued Nextel.
''You'd have one less network to deal with, so you'd reduce some of the complexity,'' Robert W. Baird & Co.'s William Power said.
The Houston-based analyst said there is less than a 50 percent chance Sprint will sell or spin off the assets, because the board probably wants to give Hesse more time to revive the business.
Sprint is the third-biggest U.S. mobile-phone company.
Miller said Nextel might be worth as much as $10 billion. Goldman Sachs Group Inc.'s Jason Armstrong in New York estimated the division's value at $8 billion to $10 billion.
The Journal reported that Deutsche Telekom AG is examining a takeover offer for Overland Park, Kan.-based Sprint. The purchase would make the German company's T-Mobile USA unit the largest mobile-phone company in the U.S.
About 25 percent of Nextel's subscribers fled in 2007, leaving the unit with about 13 million. Last month, Hesse, who took over in December, said the network could still attract enough users to become profitable.
Sprint Nextel Corp. could get as little as $5 billion if Chief Executive Officer Dan Hesse opts to sell the Nextel business, a fraction of the $36 billion the wireless carrier paid in 2005, according to Cowen & Co.
Get the full article here.
