Sprint Nextel was just trying to mind its own business Thursday – you know, continuing to fix customer service and preparing to launch the new iPhone-killing Instinct phone – but it was not to be.
Sprint, the nation's No. 3 wireless company, quickly was caught in the swirl surrounding Verizon's plans to scoop up Little Rock, Ark.-based Alltel. The proposed deal would give Verizon Wireless 80 million subscribers and a lock on the top spot in the industry.
“The math is appealing: Sprint has 21% of U.S. subscribers, and T-Mobile has 11%. Together, their 32% market share (assuming few subscribers leave) would make Sprint-T-Mobile the biggest wireless company in the U.S., ahead of AT&T, the current No. 1, and Verizon-Alltel, which would vault ahead of AT&T when the combination is completed.”
The Wall Street blogger concluded, however, that Sprint would be far better off doing nothing other than taking care of its current business, saying a “merger-by-numbers isn't going to help Sprint.”
Larry Dignan at ZDNet said the same “subscriber envy” that sent Verizon calling on Little Rock could motivate Sprint.
“Simply put, scale matters. In fact, the Verizon Wireless purchase of Alltel may make a Sprint and T-Mobile merger more likely,” he wrote.
Om Malik wrote that Verizon and Alltel won’t be the last U.S. wireless carriers to link up.
“The deal is part of a wave of consolidation being brought on by a slowing wireless market. UBS Research estimates that wireless subscriber growth in the U.S. decelerated to 8.6 percent in the first quarter of 2008 from 9.2 percent in the fourth quarter of 2007. Wireless penetration is over 84 percent. Wireless has been a big driver of earnings for the likes of Verizon and AT&T.”
Julie Ask of Jupiter Research said the Verizon deal certainly has intriguing implications for Sprint.
“Do they have enough scale to be cost competitive with the others?” she asked.
Others examined the impact of the Alltel-Verizon combination on wireless consumers, especially factoring in the current state of Sprint’s business.
"If the deal goes through, two companies, Verizon and AT&T, will control about 150 million of the 260 million wireless customers in the U.S.," stated Public Knowledge in a piece on Broadband Reports.com. "With Sprint in a weakened condition, this deal will speed the unfortunate trend of giving consumers fewer, rather than more, choices in telecommunications services, while giving a few companies more control over the lives of consumers."

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