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Sprint to Sell Nextel as Bidders Circle
(06 May 2008, BWCS Staff)Sprint appears to be moving closer to selling off its Nextel division with at least two potential suitors ready to press their case. According to recent reports in the Wall Street Journal, the German telecoms giant Deutsche Telekom is getting ready to bid for the mobile company. However, a new company appears to have entered the picture with the Journal reporting that newcomers Cyren Call, also preparing to mount a bid.
The two year-old Cyren Call was set up by Morgan O'Brien, one of the co-founders of Nextel, and is busy trying to put together a group of investors to back its bid to buy Nextel. According to Cyren Call's website, it currently advises the US government on the possible creation of a nationwide, wireless broadband network to carry priority public safety communications. According to the Journal, other bids for Nextel are being lined up by private equity groups.
Some analysts believe that Deutsche Telekom may be merely testing the water by allowing stories that it may bid for Nextel to surface. If the market reacts favourably to the rumours, then the telco may push things further. However, if the sentiment on Wall Street and among DT's shareholders is overtly negative, then the German company can walk away with little loss of face.
Speculation that DT may move for Nextel began last month after investment bankers Merrill Lynch reported that Sprint's recently introduced, all-you-can-eat mobile voice call and text package would put most pressure on the operator's smaller rival, the German-owned T-Mobile USA. That, in turn, sparked rumours that T-Mobile's wealthy parent would merely buy up Sprint to stop the planned price cuts harming DT's offspring.
Sprint reported an impressive loss for the final quarter of 2007, when it was US$29.5 billion in the red. It is also said to be losing customers fast, with over one million expected to jump ship during the first quarter. Its response has been to launch the US$89.99 all-in package, which includes all calls, texts and push-to-talk services.
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