Sprint Corp. and Nextel Communications Inc. are expected to close their proposed $70 billion merger today, giving birth to a new entity known as Sprint Nextel Corp., the nations third-largest wireless carrier after Cingular Wireless and Verizon Wireless.
The marriage of equals is a bellwether for industry growth, and not just in terms of market share and consolidation. Todays wireless device can become a conduit for videos, music, games, commercials, dance lessons, you name it just like televisions and PCs, this third screen could become an entertainment and enterprise powerhouse.
While subscriber voice traffic remains the bread and butter on the wireless revenue table, capturing peoples eyeballs may be the key metric going forward. Sprint Nextel looks to become the engine driving that approach, leveraging Sprints high-speed EV-DO data network and Nextels expertise with location-based and enterprise applications to capture the interest and loyalty of a high-value group of users who will know the company as an applications and content vanguard. Sprints broad market awareness among consumers and Nextels reputation as entrepreneurial and business-focused, an identity solidified by its hallmark push-to-talk mobile application, has spurred the new carrier to lead with the Sprint name from a branding perspective, while retaining Nextel as a product line brand name.
Another, perhaps more important factor, is the combined 2.5Ghz spectrum the two own, which covers 80 percent of the nation. That asset is expected to be useful for licensed Wi-Fi and WiMAX service delivery in the future, depending on regulator decisions, positioning Sprint Nextel to compete with RBOCs, cablecos and wireless operators alike with broadband last-mile coverage, and an array of wireless fixed and mobile content and applications that bristles with revenue opportunities that go far beyond the cell phone.
Sprint Nextel CEO and chairman Gary Forsee is on the record as seeing this so-called 4G approach as leapfrogging the mobile-bound 3G efforts of the competition to roll out broadband data. Eventually, distinctions such as wireless and landline, and fixed and mobile, could go away, giving rise to a world where voice, data, video and content are delivered to any device, anywhere, in a seamless, carrier-grade fashion. Televisions and PCs could go wireless. Workers could roam from home to car to office, VoIP to cellular to Wi-Fi, with one handset and without ever dropping a call. While it seems like science fiction, Sprint Nextel is poised to become a first market mover, with some 4G services rolling out as early as 2008.
The two companies announced their agreement to merge on Dec. 15 of last year. Sprint Nextel common stock will begin trading Monday on the New York Stock Exchange, under the ticker symbol “S.”