A Sprint Nextel (S) Spinoff Could Be A Motorola Win (MOT)

Sprint (S) is still trying to figure out what to do with the Nextel walkie-talkie network it bought for $36 billion in 2005 — a deal it admitted this spring was about $30 billion too expensive. One option Sprint noted in its quarterly report to the SEC last week: a Nextel sale.

…We are exploring alternatives for our [Nextel] iDEN network and related operations that include improving operations, making additional investments, entering into strategic partnerships and considering potential divestitures.

And it’s apparently in a hurry. The carrier has offered a $1 million bonus to its president of corporate development for the “strategic resolution of the iDen network,” Jefferies analyst William Choi notes.

Separating Nextel from Sprint now could be tricky — the carrier has spent the last three years combining the networks. But any sale or spinoff could be good news for Motorola, Nextel’s handset and infrastructure supplier, Choi argues.

Why? Sprint has turned attention away from Nextel as subscribers have fled the walkie-talkie service — and is investing in a different walkie-talkie service using incompatible Qualcomm (QCOM) technology.

But a strategic Nextel buyer “would place a renewed focus on building and growing iDen for public safety and emergency transponder usage,” Choi says. This could boost Motorola’s (MOT) iDen infrastructure business — a small, but not insignificant part of Motorola — and its iDen handset sales.

See Also:
Sprint CEO: ‘Not Turned The Corner Yet’, Revenue Misses, Customers Still Fleeing
Sprint’s SK Telecom Talks: Partnership, No Merger
Sprint Thinking About Nextel Sale, Spinoff

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