Sprint’s QChat – A Step Closer to Selling Nextel – Thoughts on Buyers

Implications: QChat is good news for Dan Hesee and Sprint.  This is a positive and consumer visible first step towards disconnecting the Sprint network from the Nextel network. A potential buyer for Nextel is Morgan O’Brien.  

Analysis: In my past analysis entitled, Sprint and QChat – This Could Be An Indication of Where Sprint is Heading, I had praised Sprint’s move towards implementing this new CDMA Push-to-Talk feature.  By implementing this feature, Sprint takes a step towards providing current Nextel customers with a feature that they use.  Push-to-Talk was a feature that the old Fleet Call (now known as Nextel) was known for and set it apart from all other carriers for years.

The feature was and still is a funky feature that enables group call.  Group call is a feature that used by construction companies, shopping mall employees, security guards, salespeople, and families.  The feature endeared the company to families; just look around any amusement park or family venue and you will see hundreds of families suing the feature.  However, Nextel’s network just plain reeks as do the handsets.

Now Sprint can take steps towards replacing the Nextel network a bit more quickly.  Before Dan Hesse sells off Nextel it is important for Sprint to pull off as many customers as quickly as possible.  The implementation of the QChat is a visible sign of the company’s move towards selling off the Nextel network.

As for this talk about making Sprint a more attractive target for an acquisition by Deutsche Telekom. NONSENSE.

The Street has been claiming that selling off just Nextel would be much more difficult than selling off all of Sprint.  I disagree.  I had not mentioned this in past analyses but the chances of the U.S. government approving the sale of Sprint to Deutsche Telekom is close to zero.  People, especially stock brokers, fail to realize that telecommunications is a national security imperative.  Selling off the Nextel network is more likely and going to be approved by the U.S. government (courts and regulatory authorities).  Think Alcatel and Lucent.  Alcatel had to turn cart wheels before shareholders and the U.S. government to buy Lucent, including agreeing to take a hands off/gentile approach to managing Bell Labs, the nation’s last real telecommunications think tank.  I recall Street discussions of Alcatel buying Lucent back in 2001 and the indusry scuttlebutt was; “It ain’t going to happen unless there are major concession from the Alcatel.”  Guess what - the negotiations and concessions took close to 4 years.  Now look at Alcatel-Lucent.  I am sure the original Alcatel shareholders are regretting their decision.

If Deutsche Telekom actually proceeded with a wholesale acquisition of Sprint, it would be in court and before regulatory authorities so long Deutsche Telekom will be regretting it ever made the attempt.  What is more probable is an investment in Sprint.  I know stock brokers hate this kind of talk but frankly it is appalling that the Street forgets how important telecom is to any nation’s security.  Does ayone actually believe that the U.S. is going to hand over the Number 3 wireless carrier over to a foreign buyer without carving up Sprint first?

As for finding a buyer for Nextel, Deutsche Telekom’s T-Mobile network can be easily integrated into the Nextel network.  T-Mobile and Nextel use a TDMA based technology.  A potential second buyer for the Nextel network is Morgan O’Brien of Cyren Call.

O’Brien is probably one of the only telecom professionals who has dealt with non-contiguous spectrum allocations and made it work.  O’Brien founded Fleet Call/Nextel back in the late 1980s.  O’Brien built Nextel from the ground up.  Fleet Call was built on the acquisition of dispatch radio companies and their spectrum.  At one point Fleet Call had the fastest frequency scanning handsets in the country thereby enabling the company to operate anywhere in its nationwide hodgepodge of license.  Nextel’s frequency bands have been cleaned up since O’Brien left Nextel.  In other words, if he bought Nextel, it would be like O’Brien was coming home.

O’Brien also has experience working with local government officials.  He can turn Nextel around and use it to support his new company Cyren Call and still have money left over to bid for spectrum.  Cyren Call also looks good politically, imagine a company focused on public safety as it primary mission.  What politician is going to pass this up?    O’Brien has done it before and can do it again.

I realize this position irks a number of business professionals but you got to give a man his due; this guy has earned it.