Is Sprint Nextel ripe for a takeover?It’s no secret that Sprint Nextel Corp. has been struggling since its $36 billion merger well over a year ago. One analyst firm speculates that the carrier’s floundering might even make it a takeover target.
Probe Financial Associates Inc., a research firm that specializes in the carrier market, issued a report Wednesday titled “Sprint: Takeover Possibilities and Valuation.”
The report examines Sprint Nextel’s wireline, traditional wireless and WiMax businesses, the carrier’s operational performance problems and future possibilities, said Victor Schnee, a partner at Probe
For several months, there has been conjecture that Comcast Corp., among others, might be looking to buy Sprint Nextel, Schnee said. “Those reports were premature.”
But Schnee said there are a few factors that could make the takeover talk a reality.
The carrier needs to improve its operational performance, he said. Specifically, the company needs to work on reducing high customer churn rates, growing its subscriber base and building its average revenue per user, he said.
Another problem that has to be addressed is Sprint Nextel’s management team. “[Sprint Nextel CEO Gary Forsee] needs to fill the position right below his with a recognized industry leader,” Schnee said. “If Forsee doesn’t bring in someone that inspires confidence, and performance doesn’t pick up, Forsee could also be vulnerable.”
While it’s possible another service provider or a private equity firm could take over Sprint Nextel, Schnee noted that success may also be in the carrier’s future. “There are not overwhelming odds that there will be a takeover. Sprint is a substantial company that has tremendous resources. If Sprint gets the marketing talent and leadership it needs, it can straighten out its problems.”
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