Sprint Center Of Attention For Nextel And Verizon Wireless

Verizon Wireless, a combination of Verizon Communications and Britain's Vodafone Group, is said to be considering making a bid for Sprint. Such a bid--if actually undertaken--would likely upset Sprint's merger with Nextel Communications. The Wall Street Journal reported Tuesday that Vodafone will back Verizon Wireless if it decides to go after Sprint.

"It makes some sense for Verizon Wireless to go after Sprint," said Pete Wilson, president and CEO of telephony consultancy Telwares Communications. "First, it would make Verizon the clear leader in wireless. And, second, it would give Verizon a big boost in the enterprise market."

While stock markets and the entire cellular industry have been roiling for days with news of a pending merger between Sprint and Nextel--with Sprint to emerge as the dominant partner--all parties have remained silent publicly, leaving investment bankers and company executives to leak the merger activities to the media. Sprint and Nextel are preparing to announce their merger tomorrow, according to the latest leaks.

"It must be a good time to be Sprint," said Wilson, a former Sprint executive himself. "Sprint is strong in enterprise wire line. It's a real powerhouse in the enterprise market."

Before Verizon Wireless's interest in Sprint--fleeting or not--Sprint's wire line was looked at as relatively unimportant in a merger with Nextel, and cell-phone experts were speculating that it would be disposed of to give Sprint-Nextel the opportunity to concentrate on their wireless business.

Wilson figures, however, that Sprint's enterprise business, along with its nationwide fiber-optic network, would be a magnet for Verizon Wireless and for its half-parent, Verizon Communications. Wilson noted that AT&T and MCI have the strongest landline enterprise networks, followed by Sprint's network. Verizon trails far behind in enterprise market share and would find Sprint's landline enterprise network a big asset.

"And that fiber network has value in wireless," said Wilson. "It routes wireless calls all over the country."

A bid by Verizon for Sprint would have to pass regulatory hurdles. Sprint was badly burned a few years ago in an attempted merger with WorldCom--now MCI--and lost time and money in the unsuccessful attempt, which was quashed by regulators. "It tied Sprint's hands for a year," said Wilson. "And a year is a long time in this business.

Where does all this leave Nextel?

"Nextel is going to have to migrate off its 800=MHz spectrum no matter what happens," said Joe Nordgaard, managing director of wireless consultancy Spectral Advantage. Sprint and Verizon Wireless use the same CDMA technology, and Nextel has a proprietary spectrum infrastructure.

As the rumor mill now stands, Sprint and Nextel are preparing to announce their merger tomorrow, with Sprint's shareholders expected to get 51 percent of the combined company, and Reston, Va., is scheduled to be the firm's headquarters. Sprint's Gary Forsee will likely be named chief executive of the new company.

But the cell-phone landscape seems to be changing hourly and all that could be trumped by other developments.