A deal for Sprint Nextel (NYSE: S) to buy Metro PCS as a means of adding to its troubled subscriber base, has been killed–presumably by the Sprint board. It is one of the few transactions that might give Sprint some level of scale to compete with AT&T (NYSE: T) and Verizon Wireless.
It may be that the cost of transaction was too high. It is supposed by the media that Sprint would pay $5 billion, which is nearly two thirds the amount of Sprint’s. Sprint has a crushing debt loan of $16 billion. Its earnings are no more the modest.
Sprint would have gotten 9.3 million new subscribers from Metro PCS to add to its own 52 million. But, Spring has had problems with maintain it own base. Sprint’s board may have decide that the firm could not manage it current deep problems along with an integration.
Sprint is now as desperate as a year ago when AT&T offered $39 billion for No.4 US wireless carriers T-Mobile. The government killed that deal. But, the end of the transaction did not help Sprint’s fortunes, even if it did remove a potentially larger competitor from the market. Sprint has not shown it can improve its fortunes no matter what the size its competition is.
Douglas A. McIntyre