SK Telecom Says No To Buying Sprint – GOOD !!!!!

Implications: SK buying Sprint could actually work; if the world was perfect. However, Sprint shareholders should not hold their breath waiting for a deal. There is a better alternative for SK and Sprint.

Analysis: SK Telecom (SK) buying Sprint would as bad as Sprint buying Nextel (which happened) and Deutsche Telekom buying Sprint.  Remember a few months ago analysts were floating the idea that Deutsche Telekom could and should buy Sprint just for the customer base?  I think I said:  STUPID Idea !!!

In my past analysis entitled:  “Forget About Deutsche Telekom – Cyren Call May Be The Next Owner of Nextel”, I said that T-Mobile’s network was incompatible with Sprint’s and hence we would be seeing a repeat of the original Nextel purchase mistake.  Buying a customer base is not reason enough alone to have made such a purchase.  A Deutsche purchase of Sprint would have spelled disaster for both companies; the only winners would have been the stock brokers.  By the way I still think Cyren Call should purchase Nextel.

In the case of SK Telecom (SK) , SK has deep (and strong) experience with CDMA and next gen technologies.  Through Helio, SK has experience in the U.S. marketplace.  The company could buy Sprint.  Bear in mind Helio already has a relationship with Sprint; hence it is not like SK does not know Sprint.

However, I would not advise selling to SK until a careful examination of the strategic fit is done.  Frankly, if Wall Street is clamoring for the purchase, I would ask investors to do your own homework.  The idea of SK working with Sprint is sound but an outright purchase is not likely.

SK will not be rushed into a deal.  SK Telecom does not care about generating a bump up in the Sprint stock just so a bunch of brokers can run up transaction fees.  SK will examine and so will the U.S. government, any outright purchase of Sprint with an eye towards politics and U.S. national security.  In other words, SK Telecom understands that even if such a purchase were desired there would be so many regulatory hurdles it would make an outright purchase unpalatable.  A total purchase could take years to execute and complete.

However, a minority equity investment from SK into Sprint is a very sound idea and one that could be executed easily and this year.  Sprint would get cash and SK would get a major foothold in the U.S.