Sprint 'Committed' to iDEN

Rumors continue to swirl around the fate of Sprint Corp. (NYSE: S), with the latest talk centering around a possible spinoff or sale of the firm's Nextel unit and the associated iDEN network.

Any spinoff, however, would dramatically contradict new CEO Dan Hesse's stated commitment to maintain the iDEN network and its popular push-to-talk service for the foreseeable future.

The Wall Street Journal reported Tuesday that Sprint was looking at strategic alternatives for the unit, including a possible spinoff or sale.

Such actions, though, would reverse CEO Hesse's stated aim of "reinvigorating" the Nextel Direct Connect push-to-talk service on the iDEN network. In February this year, he described the network as an "important asset" on the firm's fourth-quarter earnings call.

In fact, Hesse promised to launch new iDEN handsets from Motorola Inc. (NYSE: MOT) and the first-ever iDEN BlackBerry with WiFi in 2008.

The operator certainly needs to do something to stem the tide of defections from the Nextel service. Former Nextel customers have been jumping ship for months, and in the fourth quarter of 2007, Sprint reported its iDEN subscriber base dropped nearly 25 percent year on year.

Now Sprint says it expects to lose up to 1.2 million subscribers with annual contracts across its iDEN and CDMA networks in the first quarter of this year.

Nonethless, there are still 17.3 million customers on the iDEN network, including 1.4 million users with dualmode phones that can move between the iDEN and CDMA networks, according to a Sprint spokesman. The operator had 53.8 million subscribers in total at the end of 2007.

Various Sprint spokespeople told Unstrung that the operator could not comment on the latest round of "rumor and speculation." Nonetheless, spokesman James Fisher says the operator is "committed" to the iDEN network.

"We see it as a key differentiator for us," he adds.

When it completed the $36 billion merger with Nextel in 2005, the operator made some statements about phasing out the network in 2010. Fisher says a phase-out is no longer in the cards, and Sprint has no plans to shut down iDEN.

Technology Business Research Inc. (TBR) analyst John Byrne suggests an iDEN spinoff would be possible if, as has been rumored, Deutsche Telekom AG (NYSE: DT) makes a play for Sprint. (See DT & Sprint: A Bargain in the Balance? and DT Sprint Bid 'Unlikely' .)

"Assuming the iDEN network is spun off, I think the two-network CDMA/GSM scenario between Sprint and T-Mobile is manageable, and the two networks would merge nicely as the company moves to LTE, likely in the early part of the next decade," he writes in an email reply to questions.

— Dan Jones, Site Editor, Unstrung

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