Sprint to drop Nextel name after Softbank deal
- 06 November, 2012 20:03
Nextel, an upstart mobile operator formed in the 1990s that attracted a loyal following in construction and other trades, looks set to disappear after Japan's Softbank buys 70 percent of Sprint Nextel.
After the closing of the deal, forecast for the middle of next year, Sprint Nextel expects to take on the name Sprint Corp., the company said in a question-and-answer document for employee that was filed to the U.S. Securities and Exchange Commission on Friday. Softbank's purchase and investment in Sprint are still subject to approval by shareholders and regulators.
The name change doesn't come as a surprise but most likely eliminates a longstanding brand from the U.S. mobile market. Sprint is already gradually shutting down the Nextel network, which uses a unique technology called iDEN, so that it can reuse the iDEN radio spectrum for its LTE network. Sprint expects to shut down the last of the Nextel base stations next June. iDEN is one of the oldest technologies now fading away in a tech industry that easily discards old products and brands.
Nextel merged with Sprint in 2005 in a deal that gave both carriers greater scale, with an enterprise value of $70 billion and more than 35 million total subscribers. But bringing the Nextel subscribers over to Sprint's CDMA network proved a challenge, and the merged company continued to maintain the two separate networks while managing both brands. The merger never elevated Sprint Nextel above third place in the U.S. mobile market, which is still dominated by Verizon Wireless and AT&T. Sprint now has approximately 56 million customers but has suffered a string of financial losses.
Nextel built its network by cobbling together overlooked bits of spectrum and using the proprietary iDEN system, which was predominately supported by equipment from Motorola. But iDEN eventually proved too slow for the types of mobile data use that emerged with 3G networks.
The carrier's strongest selling point was its push-to-talk system, which allowed groups of users to talk to each other in the style of a walkie-talkie without making a conventional call. Sprint is now migrating push-to-talk users to its Direct Connect technology, which works on CDMA and other types of networks.