By Allen Tsai | Sun Aug 15, 2010 8:17 pm |
Sprint's buyout of Nextel is ranked as one of the worst mergers of the last five years, according to financial services firm Bloomberg.
The New York-based news company said the $36 billion deal in 2005, in terms of shareholder value, was the "third-worst," out of the 100 biggest takeovers. It led to hundreds of thousands of customer defections and a 47 percent plunge in stock price compared to rivals Verizon and AT&T.
Nextel's push-to-talk network, which is incompatible with Sprint's, runs on a unique technology, called iDEN, which also limits its selection of smartphones. The Nextel business loses over a million subscribers every year.
The Overland Park, Kan.-based company is now worth around $30 billion -- valued at less than the price Sprint paid for Nextel.
Bloomberg said 53 of the largest 100 deals executed from 2005 to 2008 -- during the financial boom -- now lag behind industry peers. Only Boston Scientific's acquisition of Guidant and McClatchy purchase of Knight Ridder scored lower than Sprint.
"Sprint has made great strides in the past 2.5 years in improving its customer experience, strengthening its brand and generating cash," said Scott Sloat, a Sprint spokesman. "The combination with Nextel also allowed Sprint to bring the first fourth-generation mobile-broadband network to customers."
The beleaguered carrier now hopes on to win over customers by racing to roll out a new higher-speed fourth-generation, or 4G, service. But shortages of its 4G phones have largely hindered its progress.
Earlier this month, Clearwire, a data network company mostly owned by Sprint, began to test a rival 4G technology known as Long-Term Evolution, or LTE, which could open the road for a merger with struggling peer T-Mobile.
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LightSquared accused GPS makers and the government of rigging tests showing its network interferes with GPS signals, as the company's attempts to extend its service nationwide remain on hold.
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