Sprint Nextel: Is the other shoe about to drop?
Speculation fast & furious about provider’s WiMAX future
The speculation about what Sprint plans to do with WiMAX is spinning up to furious proportions 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.