bloggingbuyouts

With Sprint Nextel (NYSE: S) bleeding customers and cash lately, CEO Gary Forsee may see 2007 mark the end of his career at the telecom giant. Sprint's Q1 numbers were way below the competition, as the company's botched acquisition of Nextel in 2005 has proved disastrous for the combined company. Why? Well, Sprint management must have given Nextel subscribers the cold shoulder after the deal closed, which is too bad considering Nextel wireless subscribers brought in the highest monthly bill and were the most loyal. Well, they were before the merger anyway.

It's been rumored that Verizon Wireless (45% owned by Europe's Vodafone) was possibly interested in a deal to acquire Sprint Nextel. In the wireless telecommunications game here in the U.S., mega-mergers have been a mainstay. Verizon was eclipsed by Cingular Wireless (now AT&T (NYSE: T)) a few years ago when Cingular Wireless bought the "old" AT&T Wireless. With Sprint Nextel having a poor reputation but a huge wireless customer base of over 53 million, are things ripe for a corporate takeover or even a buyout by private equity?

Verizon Wireless uses the same technology as Sprint Nextel, so the acquisition and fold-in would be technically very easy, although many wireless licenses would have to be disposed of somehow and the duplication in equipment would be an issue. How about Alltel Wireless, the fifth-largest wireless carrier in the U.S.? Like Sprint Nextel, Alltel uses the same technology as Verizon Wireless, making it a viable takeover candidate as well.

A purchase of Sprint Nextel (or a merger) or Alltel Wireless by Verizon Wireless would again put Verizon Wireless atop AT&T as the largest wireless carrier in the U.S. -- by a huge margin. Speculation has run rampant for a little under a year that this would happen, but no action so far. Whatever the interests of private equity, the rapid combination of wireless companies in the U.S. is far from over.