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Sprint still chained to Nextel

by on14 November 2008


$35 billion disaster that will not go away

Sprint is
regretting the ill-advised decision to spend $35 billion to get Nextel Communications in 2005, as it seems to have created more problems than it solved.

The Supreme Court of Illinois has decided that Sprint has to dump its Nextel iDEN network in Sprint affiliate iPCS's territory. It has a year to get rid of the network or shut it down. Sprint had an agreement with iPCS not to operate in its territory, but when it took over the Nextel network in the iPCS territory it was actually breaking the deal.

Now, Sprint must either work out a deal with iPCS or with some other wireless operator in order to continue serving its roughly 500,000 iDEN customers in the iPCS territory. It is the latest in a long line of problems that Sprint's merger with Nextel has caused. The company is desperately trying to flog some of its Nextel network and is still struggling to get its finances back on track.

Since the merger the company has been losing customers by the millions and posted a quarterly loss of $326 million. Before the merger it was making a profit of $64 million.  Recently, Sprint hired a new CEO and has begun an aggressive campaign to improve its customer service. Earlier this year, Sprint tried to sell the Nextel business, but the weak economy has made it impossible.

Yesterday, Sprint began offering some employees a volunteer severance package. The buyout only applies to employees who have non-customer facing jobs.

A company spokesman said that Sprint doesn't have a specific goal in terms of how much money it expects to save with the buyout or even how many employees it hopes will take the package. He also said it is just one of many things the company is doing to reduce costs.

Check it out here.
Last modified on 15 November 2008
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