Short answer: Probably not.
But I think they should. Here's why:
1. They both use CDMA.
2. The longer Sprint sits around like a wounded duck the more AT&T steals their customers via the sleek and sexy iPhone. And if you think AT&T is stealing Sprint's customers now, wait until the 3G iPhone hits the streets.
3. The price war being waged by Sprint ($99 unlimited plan) will prove extremely costly for Verizon by way of profit margins.
4. Verizon has great customer service to complement, SCRATCH THAT, offset, SCRATCH THAT, replace Sprint's extremely horrible customer service.
5. Buying Sprint for a 50% premium which I think is extremely steep for Sprint would only be a $30B investment for VZ based on Sprint's closing price on 3/7/08.
Reasons why it won't happen:
1. Verizon has too much debt right now.
2. Verizon may not want to have to buy the Nextel (not CDMA, iDEN) portion of Sprint.
3. Verizon may be waiting for a better price and the longer they wait the less likely it will happen.
So, why would I want this deal to happen? Hey, I figure if you combine Verizon's customer service with their reach to boondock places in the Northeast like Conway, NH with Sprint's network and their reach to boondock places in the South like the USVI plus the defensive move of preventing AT&T from poaching all of Sprint's customers as well as placing a screeching halt to the ongoing price war it could be a great thing for all: Sprint customers, Verizon & Sprint.
PS: Hold up, now I am hearing that T-mobile may be in talks to purchase Sprint?? Go figure!
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I looked at the NY Times commentary about TMO buyout but an important option has been overlooked: the role of the CBOCs in a Sprint buyout. These cable guys have bought considerable spectrum in the recent AWS auction (last year) and presumably in this year's 700 MHz auction (bidders names held confidential until completed.) While many consider this spectrum play a defensive move, there is an untapped market for wholesale wireless providers who can fuel the next generation of mobile applications and services in enterprise, public safety, location based services, mobile TV, and other non-conventional areas. This argument led by Google and other players new to wireless (i.e. Frontline) encouraged FCC usage terms for the 700 spectrum and also influenced Verizon to open up its network to 3rd applications and devices. Wholesale wireless is essentially a "Blue Ocean" in a world currently dominated by mature voice and WAP services offering little new domestic subscriber growth and fierce competition.
With that said, the case for buying Sprint is huge for a new player entering into wireless given Sprint's reduced price, developed infrastructure, and considerable spectrum holdings. CBOCs are cautious of AT&T's/VZ's TV plays which could eat into their core business as a result of bundling advantages. By having a wireless play, the CBOCs can defend against these qual-play tactics while exporing new wholesale opportunies in wireless. I strongly believe that a Sprint purchase would require some significant house cleaning in customer service, marketing, and on senior mgmt levels to work however. A spinoff of Nextel (at much discounted value) or swift migration of users to Coma within 12mths could also be necessary given the deep culture divide between Sprint/Nextel groups which is attributable to the continued integration failures.
My prediction: a massive loss in 1Q earnings and subs followed by credit default crisis in Q2 with a buyer emerging in Q3/Q4 on the heels of a potential bankruptcy filing.
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