Sprint’s iDEN has Value

Implications: 1.      While Sprint continues to make iDEN a priority, it is not necessarily throwing lots of money at the network. 2.      Whether Sprint divests or keeps the iDEN portion, it needs to keep up with customer demand on new handset designs to retain as much value in the business as possible. 3.      The real attraction of iDEN is its captive customer base.  

Analysis:  There is no doubt that the vast amount of hemorrhaging at Sprint has been occurring on the iDEN side.  In fact, so many iDEN customers have been lost that capacity is no longer an issue and there is plenty of room for potential growth.  (In apparently no longer needing compression, the voice quality has been improved.)  Also, there appears to be no plans to do any sort of iDEN-specific data play.  The important aspect to take note of is any talk of investment on iDEN is likely to be confined to marketing and handset development rather than on the network itself.  So, investments of large amounts of money on iDEN is hardly a given.  

Somewhat surprisingly, it is not the CDMA portion that is viewed as most valuable by some potential buyers.   For example, it seems that at least in the past, Verizon was potentially interested in the iDEN network as a separate entity so that it could dramatically expand its government services business.  

A good chunk of iDEN is under some type of government agency whether it is local, state or federal.  Government entities like iDEN’s push to talk because it bypasses the normal switching fabric, providing some resiliency in disaster scenarios.  Many new doors could be opened up with the vast majority of police officers, fire fighters, as well as personnel in EMT, public works, sewer/water, etc. – using Sprint’s iDEN phones nationwide.  The idea of possibly retaining these customers indefinitely to offer them a much fuller array of services is very appealing.  

Even when it comes to Sprint, the complete unwillingness of some analysts to give it the benefit of the doubt when it comes to the iDEN network is unfair.  There is a new CEO in place, who otherwise has a reputation for making rational decisions.  For example, he did not really make any radical moves at Embarq.