Sprint Nextel (S)

Sprint's mobile devices segment could potentially be bought out or spun off as an independently operating entity, freeing up the positive revenue growth of the other segements. A Nextel spin (or semi-spin into a JV, similar to the Clearwire structure), if it happens, will be late 4Q08 / 1Q09. If the iDEN subscriber base and overall customer satisfaction has stabilized, then Sprint will be in a relative position of strength. If not, then an iDEN spin will be a distress sale. The timing of late '08 / early '09 also presumes that by that time, D Block rule making concludes and settles. There will probably be no iDEN spin to support any public safety purpose until at least the D Block rules are finalized or the block is re-auctioned. Any potential suitor interested in iDEN for public safety that might in any way be related to Cyren Call would be would never jeopardize or complicate the D Block license process with a premature bid for Nextel, unless blessed by the FCC.

I have been with every carrier and I am now with Sprint. I could not be any happier with my coverage, and the $99 plan is awesome! Customer serivce is extremely helpful, understanding, and polite. My family has been treated like royalty at the local Sprint store by the staff. With their share price this low for a company that is clearly on their way to the top of the wireless world, buy now and cash in later!!

Sprint expects iDEN capacity constraints to be resolved and to return to positive post-paid subscriber additions in 2Q07. CEO Dan Hesse's 1Q statements supporting iDEN, add more to the credibility that: a) iDEN will not be shut down, b) iDEN customers will have a broadband solution, c) the unspoken strategy of having a forced migration of iDEN subscribers to CDMA is less likely, d) a spin of the Nextel/iDEN network to the Clearwire venture is more plausible with a dual mode WiMAX device on the roadmap.

Now for some selected factoids (mostly from the earnings call):

1. iDEN has 3 million public safety customers, as of 1Q08
2. iDEN postpaid subscribers are 12.3 million, 15.7 million including Boost pre-paid, with an additional 1.6 million Power Source subs (these are dual mode iDEN PTT / CDMA voice and data phones). The iDEN network would appear to have quite a ways to go before it gets below the 10 million sub mark.
3. iDEN ARPU is below $56; CDMA ARPU is above $56.
4. D-Block Revision process is just under way (this was not on the earnings call)

It's the highest among the major carriers (VZ: $51.40, AT&T: $50.18, T-Mobile: $55, Alltel: $53.64) and is testimony to the strength of CDMA data ARPU, which is $14.

Cell phones are not phones anymore. They are wireless devices used to talk, text, internet browse, watch video, listen to music, navigation, trade stocks, etc.. Sprint offers the fastest and now the lowest cost ($99 all inclusive plan) data network plans on the market. Also, the voice quality is better then rivals AT&T and T-Mobile (Verizon is also great voice quality) thanks to CDMA over GSM technology. Sprint's data network also runs EVDO rev.A which is capable of DSL speeds on your PC/MAC with the wireless NIC provided by them.

Hesse continues to make positive moves. I've given him kudos in the past for going public with the customer care woes in the Business Week article. I believe it was a good move for him to personally star in current television ads. It seems that Hesse understands that the challenges he has are both internal and external. Most recently, he added Steven Elfman as President - Network Operations and Wholesale.

It's been a couple months since Hesse's joined the company. He's had a chance to make initial assessments. At this point, it doesn't matter whether it was part of the grand plan coming in or something decided after coming on board; Hesse has decided that he needs help. Elfman is part of Hesse's "army" having worked for him at Terabeam and AT&T Wireless. Elfman is a trusted, competent and loyal executive from Hesse's past.

There are three interesting parts to the announcement:

1. President Wholesale reporting to a President (Patterson to Elfman)

2. Chief Network Officer reporting to a President (Walker to Elfman)

3. Product Development and Tech Dev now reporting to Elfman

But for Marketing and Customer Care, Elfman is essentially a COO. Up to now and in the absence for several months of an official COO, Patterson and Walker reported to the CEO. It will be interesting to see in the future if and how these peer to peer reporting relationships are resolved. In addition, with Tech Dev reporting to Elfman, there is an open question as to where the CTO reports. Previously, the CTO reported to the Chief Strategy person that deposed CEO Forsee brought in.

The bottom once again is that Dan Hesse appears to be focused and decisive, and continues to earn positive marks for his leadership, regardless of the final outcome. ^[1]

1. ↑ http://sonicblues.typepad.com/ektan/2008/03/sprint-nextel-2.htm

Sprint Nextel's network quality is the best it's ever been, and it has made great strides in integrating billing/operating systems.

Best CDMA Network and will not need any new spectrum for a very long time.

I strongly believe Palm Pre is going to get Sprint up there again. May be not the same effect as the iPhone but, still very positive for Sprint. Every one has iPhone these days so people who want to be a little different, Palm Pre is the best bet. Palm Pre, new Samsung Instinct and Centro phones are really cool and Sprint plans are cheaper compared to AT&T. This helps in keeping current customers and signing them up for another 2 years as well as adding new ones.

Forsee is gone, C-Sat is up, calls are down, network performace never better, Plam Pre is teed up, it's a new age for Sprint. Hesse gets it, come back story of 2009.