Another potential suitor for troubled No. 3 wireless carrier Sprint Nextel? Maybe: CNBC’s David Faber reports that Korean wireless giant SK Telecom is in talks to buy the company.
But a Reuters source throws cold water on the deal: “There are no acquisition talks going on right now between SK Telecom and Sprint. Any discussions that are going on are around technology collaboration.”
SK Telecom (SKM) has already made at least one pass for Sprint: Last November, Sprint reportedly turned down a $5 billion investment offer from SK and Providence Equity Partners, which would have installed former Sprint (S) chairman Tim Donahue as CEO. Faber:
SK Telecom, which is smaller than Sprint, would be joined in any deal by private equity firms that would contribute cash towards the purchase, sources told CNBC.
A deal is not imminent and while the talks are on-going, participants caution that any agreement would at best be weeks away. The board of Sprint, which has been struggling with significant subscriber losses, is divided about whether to sell the company as some of them hold a belief that a turnaround for the company may not be far off, according to people briefed on its position.
Any deal with SK Telecom would have to be friendly. The Koreans have no plans to pursue Sprint should it not wish to be acquired. The talks have not reached a crucial phase, and specific negotiation on price has yet to take place, but they have heated up in recent days.
SK joins T-Mobile parent Deutsche Telekom (DT) as companies recently linked to Sprint. But the DT deal would have significant hurdles, like getting Sprint’s network and T-Mobile’s network, which use different wireless technologies, to interoperate. SK and Sprint already use the same technology.
The big question: Has Sprint hit bottom? Customers have left the carrier in droves, and analysts expect revenues to decline this year and next. On the brighter side: Sprint’s new smartphone, the Samsung Instinct, is supposedly selling well. And the company is taking a big weight off its shoulders by spinning off its next-gen WiMax wireless unit into a JV with Clearwire (CLWR).
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