Undoing the Sprint Nextel Merger
Could the Sprint Nextel (S) merger be undone - from a technical perspective?
An iDEN spin would be complex, but it would still be achievable with competent people in charge, and not as difficult as projected, given the relative lack of integration between the iDEN and CDMA networks.
Kathy Walker, Chief Network Officer, is quoted in the Washington Post article "Sprint Merger Would Be Hard to Undo, Officer Says" saying "With everything we've done, it'd probably take longer to undo it." This quote took the headlines from the publicly available Bear Stearns conference that took place on March 12, 2008.
If you listen to the whole event, though, you get a different picture of the level of integration that has taken place between the iDEN and CDMA networks. On a cell site collocation basis, Ms. Walker indicated that, to date, only 10% of iDEN and CDMA cell sites had been collocated. Furthermore, she said that it turned out that the costs of collocating existing sites was much higher than anticipated, so, a significant percentage of those 10% of collocated sites were for new construction. This matter-of-fact response, if accurate, calls into question one of the major drivers for the justification for the original $12B savings claim that would result from the Sprint and Nextel merger, that is, collocation savings. As such, if less than 10% of existing sites are currently collocated, then there has been public disclosure at least through this media conference of why the original projected cost savings were never realized.
Next, in response to another question on just what had been integrated between the two networks, Ms. Walker cited the following items: voice mail, messaging platforms, billing and field technical support. Generally, from a network element perspective, these are all generic, standard interface, technology independent platforms, and, with the exception of the billing platform, a relatively low proportion of total network value.
Since there have been limited cell site collocations, the opportunity to leverage backhaul over a single transport pipe also appears to have been limited. The big ticket network items, namely, switches, HLRs, base stations, BSCs, OMCs for each technology were disclosed to be operating separately.
So, besides the largely peripheral or secondary, standardized network elements just mentioned to be "merged," Sprint has at least managed after more than two years to have implemented a single physical Network Operations Center, or NOC.
A footnote on the merged field technical support staff: it was disclosed that, in large markets, the technical support people likely retained their specialization of either iDEN or CDMA technologies. Thus the cross-training of field staff has likely only occurred in secondary markets.
How hard would it be to split off iDEN in the case of a spin-off? Probably not as hard as the Washington Post article or Sprint indicates. The major tasks needed, in addition to recreating headquarters, sales, customer care and retail functions, would be: augmenting technical support, building a new NOC, planning for an HLR and billing system cutover, procuring ancillary network elements or reverting to existing ones, and, or course, negotiating procurement and support agreements with vendors and partners.
Conclusion
To be sure, an iDEN spin would be complex, but it would still be achievable with competent people in charge, and, from a hardware point of view, not as difficult as projected, given the relative lack of integration between the iDEN and CDMA networks.
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This article has 31 comments:
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West Crowe
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3 Comments
Mar 20 07:16 AM-
realityknocking
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3 Comments
Mar 20 08:48 AM-
Stachey
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11 Comments
My Website
Mar 20 09:04 AM-
cac
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1 Comment
Mar 20 09:19 AM-
idenguy
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7 Comments
Mar 20 09:25 AMThe only hard part will be finding the people to engineer it. With the last round of layoffs, there are very few iDEN guys left here in virginia :(
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Visionut
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2 Comments
Mar 20 10:39 AMThree months has gone by since Hesse has taken over this sinking ship and all we have so far is rehtoric and a few changes at the top!!! IMHO the Board and the entire executive (VP to Directors) need to be rewamped for this ship to have a chance. As these same people were no shows for the past 3 years and got Sprint to this point. What is there to tell you that changing a few figures on top will turn around this ship!!!!
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West Crowe
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3 Comments
Mar 20 10:50 AM-
Tradewolf
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7 Comments
Mar 20 11:38 AM-
Nextel Accessories
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118 Comments
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Mar 20 04:55 PM-
your dad
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52 Comments
Mar 20 06:43 PM-
eyesopenedwide
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8 Comments
Mar 21 04:02 AMWith regard to Kathy Walker's comments, she actually said it was just less that 10% of sites integrated. In my opinion, the biggest problem undoing these is the fact that the paperwork trail is so bad that they would spend months trying to figure out "where Waldo is".
Considering the economy inpact on real property values right now, along with the Sprint lack of tower ownership and its potential revenue, and a small share network of subscribers that is getting smaller, what does Sprint really own of value right now besides its Spectrum? I disagree that Sprint cannot end up in bankruptcy.
For the legacy people remaining you might want to consider this a possibility as you wait and sweat out the cuts, holding out on voting with your feet, and hoping for that big serverance package. In bankruptcy, their won't be any. Might want to take their offer the next time they ask for volunteers.
My food for thought.
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eyesopenedwide
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8 Comments
Mar 21 05:11 AM-
your dad
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52 Comments
Mar 21 07:11 AM-
eyesopenedwide
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8 Comments
Mar 21 07:44 AMGlobal Signal Posts 4Q Results
Global Signal's acquisition of Sprint's towers last year weighed on the ... to enable the company to lease space on Global Signal towers through 2008. ...
wirelessweek.com/artic... - 63k
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eyesopenedwide
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8 Comments
Mar 21 03:15 PMI am not picking on a company. Just stating public information and fact. My original comment was in response to tradewolf's comment above: "Another point that was brought up is that the Lease arrangements with colocated sites can be a cash stream from the Feds to Sprint going forward." Sprint is where they are, and what they are by their own doing. They are not the victim here.
With regard to the above opinion expressed by West Crowe regarding Cingular/ATT bleeding their customers, it is not just the customer leeching that is causing Sprint so much financial trouble. Over the past two years, Sprint has also bled their employees, investors, partners, and vendors. Trust is a hard thing to build back.
It amazes me that in a financial forum, where I thought I would read some educated opinions, bloggers attempt to bully others into submission of their own. Your emotional response to the facts would cause one to believe that you are a very scared stockholder who is watching his life savings go down the drain, or one of the same executives who took the ship down. Either way, it supports my opinion that there isn't much left to believe in.
Although I attempted to write a response on a level you can understand, I realize that might not be possible. Let me refer you to Merriamwebster.com so that you might broaden your vocabulary.
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ElBarto
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1 Comment
Mar 21 04:03 PMSprint and Nextel should never have merged. The fact that they did is in the past. In the famous words "It is what it is", and everyone needs to accept that. Iden did not kill Sprint. Sprint killed Iden. What Sprint leadership didn't realize when they acquired Nextel is that fact that Nextel customers were the most loyal in the industry, paid the highest ARPU in the industry, and overall were ok with customer care. When Sprint took control, they downplayed the importance of Iden, they let go of many of the Iden supporters who worked for the company. The Legacy Sprint employees bastardized the Iden name and that is the reason it is struggling. I am so glad that Dan Hesse is refocusing on the importance of Iden. I think instead of blaming it for all the trouble, Sprint should mirror it on CDMA, which it is starting to do with HPPT. The problem is that it still lacks many of the features that Iden offers to the public sector. HPPT does not have priority connect and the survivability in a disaster is not even close to Iden.
There is another huge problem that Sprint faces, and they won't even acknowledge it. There is still a Us v. Them mentality when it comes to internal employees. This is what really needs to stop. This is causing so much mis-information, lack of assistance, sabatoge, and such that is continually hurting the company as a whole. This is apparent to customers as well. Customers can see that when a team arrives to present, they still introduce themselves as Bob, and state that his background was with Nextel and Mary, whose background is with Sprint. It has been over 2 years since the merger, everyone works for SPRINT NEXTEL. And yes, the name of the company is still SPRINT NEXTEL. I am sure the Nextel piece will be dropped shortly because someone in marketing doesn't understand what that name means in the marketplace.
I have a question for those who say Iden killed Sprint. Prior to merger, which company was performing better? Which company was adding more subscribers per quarter? Which company had higher wireless revenues? Which company had less churn? I am not saying Iden didn't have issues. In a FEW markets the network was over stressed. The data speeds were lacking to say the least. The real thing is that through all of it the company continued to perform at the top of their game.
Selling Iden to the government is a great idea, but the Government isn't in the cellurar business. They would need to have the team to run it. I am sure that there are plenty of former Nextel employees who would love to work with Iden and for the Government. If they did spin off Iden, and all the people who understand the value of Iden were to go with it, Sprint would be in the same situation they were in prior to merger. A underperforming company that continually got their asses handed to them by the competition.
Just my thoughts on the matter.
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your dad
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52 Comments
Mar 21 04:36 PM-
Stachey
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11 Comments
My Website
Mar 22 12:51 PMYeah that's because he's Sprint guy not a Nextel guy. Sprint side still has blinders on. Everything is just dandy and there is no world beyond Overland Park.
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xnext
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29 Comments
Mar 22 04:18 PM-
your dad
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52 Comments
Mar 23 05:52 AM-
idenguy
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7 Comments
Mar 23 09:17 PMThe animosity comes from both sides. Being a legacy Nextel employee for 8 years prior to the merger and having dealt with both sides, I can honestly say that legacy Sprint employees are just as hard to deal with as I know the legacy Nextel employees are.
This is a major part of why the merger did not work. There was too much of a culture clash between the two companies and both though their ways were correct.
Nextel prided itself on not letting process and procedures get in the way of anything. If a product or service needed to get out the door, we did it by any means necessary. Sprint on the other hand bogs itself down in tickets and unnecessary paperwork. What should take a couple weeks to deploy / test suddenly takes months.
Something else that slowly happened is that the legacy Nextel managers that are left, slowly surrounded themselves with all the old Nextel people that they had been working with for years and started to exclude the Sprint employees (at least here in Virginia).
Now after several layoffs all the old Nextel power has left the company, gone to ICO, MSV, Clearwire and the ones who are left are all over in Xohm just praying for a spinoff...
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Stachey
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11 Comments
My Website
Mar 24 09:03 AMIt is not about animosity. Nextel was a company that moved things along quickly and whose employees strived for continuous improvement. They were never #1 but that never held them back. They were not conformers. The LEG NXTL employees that I know that are still at the company find it frustrating to here how certain things cannot/will not change because that is the way Sprint has always done them. The cultures and mindsets of employees are too different. What worked for Sprint isn't working for Nextel and clearly what worked for Nextel isn't working for Sprint- those parts that were given a chance at least.
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eyesopenedwide
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8 Comments
Mar 24 09:03 AM"In regad to the Nextel migrations you don't have a clue. The real issue is the sales staff. They found that they could hit their numbers by selling current Nextel customers (who have been with Nextel at least 6 months) CDMA phones on the Sprint Network and utilizing the P2K system "Port" the Nextel user over therefore getting credit for a sale that isn't a sale. This has been the number one cause of the IDEN Defections, and it is all a game so that these sales reps can make thousands of dollars without really selling a thing!!!
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User 167378
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1 Comment
Mar 24 12:19 PM-
stuck at sprint
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16 Comments
Mar 24 05:02 PMIs it possible that the gaming goes up the food chain a lot higher than just local sales managers or market directors?
Why are the employees so afraid to talk? Why are so many of them googleing the "Whistle Blower Act"?
This company is in trouble and I believe that it will unravel completely. When it does, I beleive that people will privately refer to it as Enron II the sequal!
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your dad
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52 Comments
Mar 24 05:52 PM-
Wireless Guy
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1 Comment
Mar 25 11:00 AMWhat is the pure value of the brand alone?
It would not be as hard to affect a de-merger, as it will be to migrate the spectrum.
Still, with some of the old guard at the helm (Tim) and a team of hands-on managers, vendors and partners, it could be brought back in 24 months, new spectrum and all.
Imagine if Pepsi purchased Coca-Cola 2.5 years ago and let the brand die. It is still a powerful brand, with an intrinsic value in customers' minds and wallets. It is brand which drives up customer base, and takes away market share from competitors.
It is there alright, and as you read this, deals are buzzing, I bet.
An outright sale of Nextel is one of the few major moves that Mr. Hesse and Co, can make to affect immediate and dramatic change, to pay down debt, and to raise cash to rebuild their broken down network. They can then concentrate on their strengths, Voice, Data, and either WiMAX or 4G.
So sayeth I, the Wireless Guy.
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Manager Looking Out
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1 Comment
Mar 26 01:08 AMSprint/Nextel has came so far to one Sprint, but still not one , but each as "I-CDMA"&... but no there are no "I's" in "TEAM".
Sprint's down sizing using the "domino effect" VP's, Directors, Managers, repeated cycle bumping each other all having a slot until the bottom below the Directors/Managers level called the Individual contributor's IC's on the bottom of the pay scale who strived to do the best for the shareholders lost big!
But the bigger costs start with to many Manager's, Directors, VP's and above that never seem to change or see the the bulls eye. You have to many managers not enough workers and no foundation. While the little guy of a spinning "Top" is being let go and pushed out from its feet is only a matter of time before the "Top" falls and the customers/shareholders feels the bigger fall.
As being a manger for Sprint more than a decade seeing people in meeting after meeting. Conference call after conference call, stuck in all the paperwork no wonder this we Sprint is being all eye's on "US". Let the worker's come back to their jobs. Consider the "Top" less weight & expense on top the less out of balance the top will be their use to be 1 director and 5 to 7 mangers for a region now we 7 plus directors for a region and 30 plus mangers at each teir theirs alot of money.
While the all efforts are put into WiMAX/4G/Qchat CDMA! the IDen/CDMA voice network suffers loss due to lack of manpower 4,000 jobs cut and scare tactics that the other IC's employees that are left behind no merit increases and be thankful for a job.
Reconsider a 4,000 cut of jobs and stream line the "Top" the miss management will be undr control.
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Ed Ketchoyian
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8 Comments
My Website
Mar 26 04:35 AM