In the US telecom race, Sprint Nextel is the #3 wireless carrier behind Verizon and AT&T in terms of subscribers. The company serves more than 55 million customers with mobile voice, data, and Web services over a nationwide network. While the namesake brand is reserved for premium postpaid accounts, Sprint also offers prepaid mobile access through its Virgin Mobile USA and Boost Mobile subsidiaries, which target a younger demographic. It also provides cellular access to other carriers and resellers on a wholesale basis. The company's much smaller legacy wireline business provides long-distance voice, Internet, and data services primarily to corporate customers and other carriers. In 2012 Japan's SOFTBANK agreed to acquire 78% of Sprint.
In addition to wireless Internet services Sprint Nextel offers mobile high-speed Internet services through its investment in Kirkland, Washington-based wireless ISP Clearwire, which operates a 4G wireless broadband network based on the emerging WiMAX standard. In return for contributing its WiMAX infrastructure (constructed at a cost of more than $3 billion between 2005 and 2008), Sprint Nextel received a 54% stake in Clearwire. Other investors include Google, Comcast, Time Warner Cable, and Bright House Networks.
Mergers and Acquisitions
The closing of the SOFTBANK/Sprint transaction was expected to occur in mid-2013, but a higher, unsolicited bid for Sprint by satellite television giant DISH Network could alter the outcome. However, if completed, the $21.6 billion deal (raised from $20.1 billion following the DISH offer) would be the largest acquisition of a US technology company by a Japanese business. Under the agreement, about $16.6 billion will be distributed to Sprint stockholders and $5 billion will be used to infuse Sprint's balance sheet. The more immediate benefits for Sprint are that it will receive a portion of the $5 billion now to be used as capital for upgrading equipment and building a faster data network (4G LTE, or long-term evolution); Sprint on its own was having trouble generating enough capital to deploy the LTE network to the majority of its coverage area by 2014.
In 2013 Sprint acquired for $480 million spectrum and customers (covering parts of Illinois, Indiana, Michigan, Missouri, and Ohio) from US Cellular.
After three years of declining sales, Sprint Nextel's revenue increased slightly in 2010 and even more in 2011 as its core postpaid business subscriber base grew. The company did lose money in 2011, however, for the fifth consecutive year, due in part to higher operating costs.
Sprint Nextel's wholesale business improved after taking a major hit in 2010 when sales dropped 60% after a large number of wholesale clients were reclassified as prepaid customers at the time of the Virgin Mobile and iPCS acquisitions. Additionally, revenue from wireline services continued to decline, in keeping with the broader industry trend.
Faced with brutal competition from AT&T, Verizon, and a host of smaller regional players, Sprint Nextel has partnered with other companies and shed physical assets to cut operational costs and increase liquidity. In 2009 Sprint Nextel outsourced the daily operation and maintenance of its core wireless and wireline networks to Stockholm-based wireless equipment and infrastructure services provider Ericsson. The seven-year deal, valued at up to $5 billion, left the management of marketing, sales, and customer support functions in the hands of Sprint Nextel, which still owns its network. The company sold some of its cell phone towers for $670 million and shuttered about 10% of its retail locations the previous year to cut costs; it now leases the towers.
Sprint Nextel differentiates itself from AT&T and Verizon by offering unlimited data usage for smartphone users, a sales tactic abandoned by its rivals. In a move that added considerable appeal to the company's selection of wireless devices, Sprint Nextel began to offer Apple's popular iPhone in 2011, eliminating one of its marketing disadvantages. In another bid that year to woo subscribers becoming more accustomed to using their phones for almost everything, the company teamed with Internet search leader Google to roll out Google Wallet, a service that enables mobile users to make payment to certain retailers with an Android-based phone using the corresponding Google Wallet phone app.
The company is betting on strong demand for 4G wireless broadband services to justify the expense of its investment in Clearwire. In late 2012 it announced that it would acquire the nearly 50% of Clearwire it doesn't already own for about $2.2 billion. Sprint Nextel plans to continue to fund Clearwire's LTE buildout as a complement to its own.
In 2013 it formed a mobile advertising network with European telecom giant Telefonica that will offer advertisers access to more than 370 million customers in the Americas and Europe.