Sprint Turns Down Offer For Money, Help From SK Telecom

from the things-are-getting-interesting dept

Fri, Nov 30th 2007 12:20am — Mike Masnick

It's been an interesting week in the wireless arena. First Verizon Wireless promised to tear down some of its walled garden, then it announced plans to use LTE as its next generation wireless technology... and now the news comes out that Sprint has turned down an offer of a $5 billion offer from SK Telecom and Providence Equity Partners. There were some strings attached, including bringing back Tim Donahue to run Sprint. Donahue was the head of Nextel when Sprint and Nextel merged, but left soon after the merger was done. Personality-wise, people have often noted how Donahue was different than the folks at Sprint, so perhaps it's no surprise that Sprint isn't interested, even as the company is desperately seeking a CEO following the ouster of Gary Forsee.

What's more interesting than the CEO job or the money, however, is the question of what SK Telecom is playing at here. The company has invested heavily in its US MVNO joint venture Helio, which was announced nearly three years ago to great fanfare, but hasn't lived up to the hype (though, it has managed to survive where many MVNOs have collapsed). SK Telecom, like Japan's NTT DoCoMo before it, keeps looking for investment opportunities outside their home countries, but never seem to be able to repeat the successes they've had back home. DoCoMo, you may recall, had a deal with AT&T Wireless that turned into something of a disaster for everyone, so having SK Telecom assisting Sprint is hardly a slam dunk, despite its success back in Korea. SK Telecom seemed to pitch part of the benefit of working with Sprint being its experience with WiMax in South Korea, but so far, that experience is anything but encouraging. It's also worth wondering if such an investment would eventually lead to Sprint taking over Helio to consolidate SK Telecom's focus (alternatively, some might point out that since Helio uses Sprint's network, SK Telecom's investment offer could even be seen as a way to protect Helio's network).

What is clear is that Sprint needs some leadership and some direction, and it needs it quickly. With Verizon Wireless' LTE announcement, the race for next generation wireless technologies got a lot more interesting. While Sprint may have had a pretty big head start, the more it staggers around trying to find a CEO and a plan, the more it cedes to the other players who at least have the appearance of having a comprehensive strategy in place (the reality may not match the PR spin, of course). The SK Telecom deal may have provided both a leader and some direction, but clearly the company's current board didn't appear thrilled with either. Don't expect this to end here, though. There may be additional attempts by SKT, and it may cause others to wake up and pay attention as well. Sprint may end up with a leader and a strategy thrust upon it, whether it wants it or not.

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Filed Under: investments, lte, wimax, wireless
Companies: providence equity partners, sk telecom, sprint, verizon wireless

14 Comments

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Anon, 30 Nov 2007 @ 2:24am

Tim Donahue
But does Tim Donahue really want to be CEO of Sprint seeing as there is this difference?

Surely if they were looking to invest so much in this company it would be best to get a leader in place who did work well there?

Oh, and "The SK Telecom deal may have have provided"
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MEDIAEMPYRE, 30 Nov 2007 @ 6:26am

The company as a whole is not going to do well. Nextel had better sales people than Sprint could ever dream of and Sprint immediately got rid of them. Nextel had the highest ARPU of any wireless carrier. The best thing for Sprint to do is to adopt what made Nextel good and get rid of the crap that was and still won't work.
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fedup@Sprint, 30 Nov 2007 @ 6:45am

Tim Donahue
Bring Back Tim. Mr. Donahue is the only person who can turn things around at Sprint. Sprint needs to get off their high horse and get Tim in there; Sprints "personality" is exactly why they are in the crapper. Tim has a way of motivating workers and the knowledge and resources needed to make Sprint a true competitor in the wireless market. Look at what he did with Nextel. Nextel, originally a cab dispatch company turned into the number 4 wireless provider with the highest user revenue. If Sprint doesn’t realize this, they will get what they deserve………
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Dave Burstein, 30 Nov 2007 @ 8:39pm

SK's strategy and Donahue
Mike

SK is trying to solve the problem of a stagnant Korean market because literally almost everyone in the country has a mobile. They have competition preventing price increases or any other way to increase revenue.

I'm not surprised they are thinking of investing in the U.S., one of the less competitive wireless markets. They have invested heavily in China Netcom and if I remember right I've seen their traces in Vietnam and India. Very competent outfit.

Donahue I've only met a few times, but he struck me as a very competent, hands on guy. Yuki at the Washington Post had a similar takeaway, "Nextel is still the smallest of the six national wireless carriers, but it is the most profitable. Its customer loyalty ranks second only to that of giant Verizon Wireless. ... Early in Nextel's history, cellular investor Craig O. McCaw and his family put $1.1 billion into the company and infused it with a fighting spirit by bringing in "guys who knew how to compete," said William E. Kennard, former FCC chairman and a member of Nextel's board. Those fighters included Donahue and former Nextel chief executive Daniel F. Akerson."

Most of the Sprint leadership I've met has been megacorporate wimps who rose in a bureaucracy. That's not what they need.

Your close reader
Dave Burstein
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Dave Burstein, 1 Dec 2007 @ 6:49pm

Comment corrected
SK has invested in mobile company Chian Unicom, not in China Netcom.

Apologies for my mistake. db
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alaric, 3 Dec 2007 @ 7:22am

Donahue
Sprint's problem is not Nextel's network as the Wall st. journal contends but rather Sprint's management of Nextel's network and sprint's maintenance of its relationship with nextel's customers.

There was news some time ago that sprint fired a number of key figures in charge of maintaining Iden, prior to its problems. Sprint purged nextel's marketing personel from the company as well.

The reverse should have happened. Nextel's marketing and administrative staff should have been running sprint, though they should have obviously kept the sprint network and the engineers who manage it.
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Anonymous Coward, 4 Dec 2007 @ 8:25am

Tim D
I say bring Tim D back...he did nothing but good and the employees were SO happy when he was with Nextel. Lets of people really think he can change and turn things aorund for the better!
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John O'hearn, 4 Dec 2007 @ 10:21am

Tim, We need you back at Sprint!!
I agree with Anonymous Coward. Working for Sprint is terrible. Nextel was so much better. Much more organized. The Sprint executives need to all be replaced with people who know how to run a large company. Sprint absolutely has what it needs to be number one or two in the market, but not with the people they have running the company now. Everyone I know wishes Nextel bought Sprint. Sprint needs Tim Donahue, what a great Christmas present that would be.
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Mike Reynolds, 4 Dec 2007 @ 10:47am

Sprint just keeps committing suicide
First they fire paying customers when they are struggling to keep the ones they have (DUH),then turn down $5 billion (double DUH) that could have been used for WiMax (as if WiMax is even going to happen for them now)and Tim D. a person that could turn this company around (I just give up). Great job Sprint, you should be proud of yourself. Who do they have running this company anyway's, I think my dog makes better decisions then the exec's at Sprint. The poor shareholders are never going recoop their money. John O I dont mean to be the grinch but I see Google coming after Sprint.
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Anonymous Coward, 5 Dec 2007 @ 6:21am

Nextel's iDEN devices are junk. Merger should have never happened.
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John O'hearn, 5 Dec 2007 @ 7:46am

Anonymous Coward, once again we agree.
The merger should never have happened with Sprint buying Nextel, It should have been Nextel buying Sprint. iDEN wasnt junk until Sprint took it over, once Sprint ran the network customers couldnt leave fast enough. If a company with employees who knew what they were doing, like Nextel, bought Sprint they would be in the #1 or 2 position by now. Instead Sprint is hanging on by a thread to stay in business.

Mike R.
I dont see it being a bad thing if Google bought the company, Sprint needs an executive overhauling to find people that can get it out of the gutter and stop making costly decisions based on pride.
Whipe the egg off your face Sprint and get Tim back to fix the mess you made.
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Mike Reynolds, 5 Dec 2007 @ 12:15pm

Just when you think they couldnt be any dummer
Too funny. I was just reading that Sprint is now going to spin off WiMAX into a separate investor-funded company. All you can do is shake your head and laugh at these guy's. Instead of accepting the offer of $5 billion, which could have been invested in WiMAX and (as John said)sucking up whatever pride they have left by admitting they were wrong about letting Tim go and take him back. They would rather say NO and spin off the only thing that might have kept this company's outlook looking half way decent. Talk about biting off your nose to spite your face..Yet another big DUH from the powers that be at Spoogle oopps I mean Sprint.
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J.P, 9 Dec 2007 @ 7:43pm

All of the above.......
First off, to Anonymous Coward, Nextel's iDEN devices are not junk. If you knew what you were talking about you would know and understand that the iDEN devices, made exclusively by Motorola, with the exception of the Blackberry devices, last longer than the "junk" other providers offer. They have stepped up their offerings in the past few years to compete.
Secondly, i agree that Sprint made huge mistakes when they got rid of the major players from Nextel.Sprint is a "retail" focused company and they have issues with the "aggressive" business solution selling background that these people had - oh, by the way, they (and those of us still there) were and are pretty successful. The downfall is the lack of customer support. There were policies and practices in place to handle and resolve issues but Sprint came along and killed them all. Someone needs to remind them of the phrase "if it ain't broke, don't fix it".
Sprint (Legacy Sprint) leadership focuses more on retail experience and incorporates that into the way they do business, but i've never heard of a retail location pulling in an account with more than 10-15 lines of services at a time.
They need to listen to the few successful Nextel and Nextel Partners,Inc. employees that are still around and make the necessary changes. Will that happen? I seriously doubt it. Will Time Donahue come back? I had to admit it, but i seriously doubt that also. Why? Tim was not a yes man. He was an action man. He was not scared to invest a little money to make money. I mean, after all, we are supposed to be a company that sells based on an ROI to get people to invest money in our services and products, but the company itself does not believe in that concept.
I have been around for some time and could go on and on. However it makes me feel to vent it will, honestly, do no good.
I am still there because i have so much time invested as well as other reasons.
Thanks for your time!
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chris d, 7 Jan 2008 @ 5:03pm

Re: All of the above.......
is it true that the goverment wants iden for there use and to get rid of the public use
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