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Mobile & Wireless
Sprint Nextel: Is the other shoe about to drop?
Speculation fast & furious about provider’s WiMAX future
by Telecommunications staff, from news reports
The speculation about what Sprint plans to do with WiMAX is
spinning up to furious proportions today as news spread that
the provider could spin off its service into another company.
A Bloomberg news report on Monday said that Sprint Nextel's
acting CEO, Paul Saleh, told investors that the carrier
is studying the possibility of spinning off its high-speed
WiMAX service to attract investors in hopes of reducing the
cost of building a multibillion-dollar network by 2010.
Another news report by the Kansas City Star says the
company is seeking outside funding to help pay for the
multibillion-dollar network following the fall-through of its deal
with Clearwire Corp., which would have allowed Sprint to share
the costs of building a new national wireless network (see:
Sprint Nextel, Clearwire terminate LOI).
Whatever the next step is, it’s clear that Sprint is under
intense financial pressure. In October, CEO Gary Forsee
stepped down at the behest of investors following a
disappointing financial performance. With analysts predicting
a less-than-stellar year-end report, investors are nervous
about committing billions of dollars to the WiMAX project.
Saleh said that an internal group is looking at several long-
term options, with a spinoff being just one. A "soft launch" of
its WiMAX service is still slated for the end of this year in the
Washington, D.C.-Baltimore area and in Chicago.
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