Telephony Magazine says Sprint and Nextel Communications have tentatively agreed to merge their wireless properties and spin off Sprint s local-telephone assets, according to the Wall Street Journal s online edition.

Under terms of the proposed deal, which has not been finalized or announced, Sprint would pay 1.3 shares for each share of Nextel in a merger of equals that could be announced “soon,” according to the article, which cites unnamed sources.

Sprint also would include some cash in the deal, which would enable it to own more than 50% of the merged company, which would be called Sprint-Nextel and would be headquartered at Nextel s offices in Reston, Va. That would let Sprint control the spin-off of its local phone assets, which would continue to be headquartered in Overland, Park, Kan.

Both Sprint and Nextel are seen as two logical targets to team with cable companies seeking a wholesale wireless partner to offer a mobile component to their bundled packages to compete with packages offered by RBOCs. By merging instead of competing for cable operators business, Sprint and Nextel could see greater profits from such deals.

Spectrally, a deal also offers some synergies. Sprint s spectrum holdings in the PCS band are adjacent to the airwaves Nextel is expected to receive through the FCC s 800 MHz rebanding plan. In addition, Sprint and Nextel have enough spectrum at 2.5 GHz to provide a nationwide wireless service, something no operator in that band has been able to accomplish to date.

Although a Sprint-Nextel merger would reduce the number of nationwide carriers to four, analysts believe there would be few regulatory hurdles, especially in wake of the Cingular-AT&T Wireless deal passing regulatory muster with relative ease.

Offsetting these positive aspects of a Sprint-Nextel proposal would be the fact that the two carriers current operations are technologically different–Sprint s network is based on CDMA technology operated in the PCS band, while Nextel uses iDEN at 800 MHz.

“That doesn t mean a deal couldn t be put together, but it s not going to be an easy thing to integrate,” Precursor wireless strategist Rudy Baca said.

Meanwhile, the New York Times today reported that Verizon officials would consider a bid for Sprint, which uses the same CDMA technology as Verizon Wireless–a strategy that makes sense, Levin said. “I think [Verizon officials] will work this weekend to propose a deal that will blow up this deal,” Levin said. “That s what I d do.”

Spokesmen for both Sprint and Nextel declined to comment.

Mark Cooper, director of research for the Consumers Federation of America, said the merger may be inevitable but is still bad for wireless shoppers. When they approved the Cingular-AT&T marriage, Cooper said, federal officials ‘’set such a low standard for competition at least one more huge merger was inevitable. We think consumers in the end are going to suffer.”

But Judy Reed Smith, president of Atlantic-ACM, a Boston telecommunications consulting firm, predicted the Sprint-Nextel deal could actually be good for consumers and business wireless customers. ”We have been going towards Cingular and Verizon owning the game,” Reed Smith said. ”I hope this will keep Sprint in the game in a way that will be good for consumers who will have three strong, large competitors.”

The 802.16e standard will incorporate a thousand or more COFDM carriers, providing more rugged data links and mobile handoff. Mobilized WiMax Solutions are available from Adaptix, SR Telecom, nex-G, Wi-LAN’s Mobilis and Proxim Pre-WiMax. “Pre-802.16e” or not.

Sprint got its start in 1899 as Brown Telephone Co. In addition to its consumer-oriented wireless business, it draws nearly half its revenue from long-distance and local telephone services.

The Kansas company is investing between $2 billion and $3 billion to build a high-speed EV-DO data network. A merger would allow Nextel to share that network instead of building its own at a similar cost.

The deal would be the second major merger in an industry enjoying explosive growth as the number of cell phone users increases. In October, Cingular Wireless acquired AT&T Wireless Services in a $41 billion deal.

DailyWireless has more on Sprint + Nextel = Cable?

Mobile phone subscribers around the globe totalled nearly 1.5 billion by the middle of this year, about one quarter of the world’s population, the International Telecommunication Union (ITU) said on Thursday.

By July this year, China was reporting 310 million users — about one-quarter of its total population and more than the entire population of the United States, the ITU said. India, with a much smaller current subscriber base, was beginning to experience exponential growth, seeing an increase of 11 million, or 25 percent, so far this year to reach a total of 44.5 million subscribers. In Russia, according to the report, mobile phone subscriber numbers jumped from 36.5 million a year ago to 60 million by September of this year.

The value of global mobile business reached $414 billion in revenues in 2003, a tenfold increase in the decade since 1993, while over the same period the overall telecommunications sector grew by an average of 8.8 per cent to reach $1.1 trillion.

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Posted by Sam Churchill on Friday, December 10th, 2004 at 1:22 pm.