Friday, December 10, 2004

Nextel Sprints Towards Merger

by DA Jacome, II
Catablast! Founder

We've spoken multiple times about consolidation within the cellular
phone industry
Lo and behold, Nextel is reportedly in advanced merger talks with
Sprint, a deal that would create the third largest U.S. cell phone
company. Verizon Wireless, however, might squash that deal--Executives
close to Verizon told the New York Times Friday that a run at Sprint
is in the picture. Sprint's market value spiked this week to $36
billion while Nextel climbed up to $32 billion. A Nextel-Sprint merger
could be ugly if not properly executed--it would affect 39 million
wireless subscribers and precipitate brand confusion and user
dissatisfaction unless everything is carried out to a T. Some analysts
harbor bleak outlooks, noting that a coupling of such magnitude would
join "two very different businesses and an assortment of overlapping
and conflicting technologies." Sprint provides wireless service and
traditional fixed-line service while Nextel is best known for its push-
to-talk walkie-talkie feature and brand loylaty. Two great companies,
yes--but are the synergies so easily available? The next stop for
Nextel may be chaos.

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