Posted by: Tom Nolle
Mobile, WiMAX, Wireless broadband
Sprint Nextel has turned in another bad quarter with net dropping by 77%. The problem appears to be the loss of high-spend customers who prefer the coverage of rivals AT&T and Verizon. Sprint was perhaps the largest of the wireless carriers to rely on low-quality, bad-credit customers for growth, and the strategy has now backfired as these customers fail to show ARPU growth, or even outright default on payments. Another issue of course is the lack of branded multi-play options; Sprint has no TV and no wireline strategy. We do not think there is any chance that Sprint can stand alone for long; the question is who might acquire them. National footprint is less valuable to cable companies who don’t have that footprint for wireline, but Sprint is the only provider who could cover a major MSO’s territory, and FMC could provide symbiosis for a player like Comcast. The problem with the MSO buyer is the low ROI of Sprint. The other option is T-Mobile, a unit of DT, or one of the major wireless carriers. A T-Mobile deal would likely gain approval; we doubt the FCC or FTC would approve a buy by Verizon or AT&T. Sprint may be driven by its problems to become the most aggressive WiMAX player; only something like a major WiMAX success could save it as an independent. There are also more rumors on Sprint and Google’s “gPhone”, but we don’t think that would be enough to turn Sprint around.