Would Google Buy Sprint?

from the and-what-would-they-do-with-it? dept

Last month, when Sprint’s investors pressured former CEO Gary Forsee to resign, Derek Kerton’s post here on Techdirt made some compelling points:

“The disconnect is that investors in Sprint are risk-averse, Blue-chip, dividend seekers. They invested in Sprint when it was a utility company. But Sprint’s ‘gambit’ into WiMAX has taken them way out of the ‘utility company’ comfort zone — and the reaction of the investors is as expected. With Xohm, Sprint’s risk profile is looking more and more like a big tech firm, say Yahoo or Apple. Today’s Sprint needs risk-seeking investors, not fixed-income seekers.”

Could a big risk-seeking investor — who surely sees an opportunity in “big tech” rather than as a “utility” play be coming along? That, at least, is the premise of a blog post from Rich Tehrani kicking off speculation that Google is sniffing around to buy Sprint — a rumor perhaps accurately called “hare-brained” by Eric Savitz.

While I tend to lean towards Savitz’s view of the likelihood of such a deal, there are some nuggets in there that could make this slightly more interesting. Obviously, Google has a tremendous interest in the mobile space these days, believing it’s a key part of its continued growth. The company has made plenty of noise about its supposed intention to bid for the 700 MHz spectrum that’s coming up for auction. On top of that, it’s increasingly looking like Sprint’s WiMax plans are in trouble. However, Sprint still controls a huge chunk of 2.5 GHz spectrum that is quite valuable (whether its used for WiMax or some other wireless broadband technology). It’s not entirely ridiculous to think that Google has at least kicked the tires on a plan that would involve getting access to that spectrum. It seems like a stretch that Google would want to burden itself with all the additional legacy issues associated with Sprint, but that chunk of spectrum sure must look tempting to a company with billions of dollars on hand, just waiting to be spent.

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Companies: google, sprint

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Comments on “Would Google Buy Sprint?”

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Anonymous Coward says:

Re: No Way

The local and long distance were already spun off last year as Embarq. So now there’s two (really three) units to the business: Wireline, Wireless, and WiMax. I wouldn’t be suprised if GOOG was interested in all parts, since they have been buying lots of dark fiber, looking to get into telecom (a la Android), and want the 2.5 Ghz spectrum.

Derek Kerton’s article hit the nail on the head, that Sprint is trying to diversify for the future, while the majority of the investors just want constant dividend. However, Sprint’s ROI and ROA are way below that of other carriers.

Kevin says:

Could be...

…but I was thinking more along the lines of rather than buying the whole thing and flogging off the parts that they don’t want, that they might just buy the parts that they want outright, leaving the rest still as Sprint. Google gets what they want, Sprint gets what they need, everyone wins.

But they’d probably get a better price to buy it and break it up.

Joel Coehoorn says:

Just buy the spectrum

Assuming the new Sprint CEO has the same feeling about Sprint’s investors, paying a nice dividend would be one way to appease them for a while. But to make that possible, the company needs a windfall of cash. The spectrum they were going to use for WiMax would make that possible, since their plan to use it has evaporated. A telco could always find something else to do with more spectrum, but apparently getting away from this kind of thing is what Sprint’s investors want.

However, I can’t see Sprint selling this spectrum to a competitor. Google, on the other hand, might be just the right player. Google can buy the spectrum for it’s own ends, which don’t likely include direct competition with Sprint. They might even include opening it up and even leasing parts of it back to Sprint at a later date.

Alaric says:

Google Makes money from ads-services

Buying a telco and competing with wireless carriers who hold upwards of 75% of the wireless and indirectly a fairly high share of the wireline broadband market might not be the best way to promote ads, services etc.

Google phone is a better road. Then again Google might be drunk with its success in the internet world and they may vastly miscalculate what it takes to run a successful telecom carrier.

Its a very very different business that is identified by long-term investments, high up front capital and slow payback. Its a slow moving snail of an industry compared to web services. In other words, its as foreign to the google way of doing things as running a dairy business.

And most importantly, its a business that is paid for by boring old voice services.

If they buy sprint, i’d hope they’d be smart enough to reassess wimax. Basing your technology on the strength of Intel’s PR department is a dubious way to do things.

fred andrews says:

Google Sprint

As a former employee of sprint (along with a significant percentage of KC residents) – finding someone with some marketing muscle and vision with high tech awareness like Google might be sprint’s salvation. The biggest knock on sprint is customer service and dropped calls. Any new take over of sprint may end up reducing the work force in KC. If that happens, a lot of good folks will be hurt when management is their biggest problem.

I am still a sprint customer, but have always been amazed at how Sprint and other mobile phone companies offer major inducements to get new customers and little to keep existing customers.

All I want is a phone that works as a phone when I need it to work like a phone. Maybe Google can facilitate that functionality while making the phone a mobile point of access for everything else.

Shun says:

Hmm...well, here goes

I posted a blank comment before this one.

OK, to go over my point: the FCC is the problem.

The problem is not Sprint, Nextel, Qwest, AT&T, or Verizon, although all of these companies share the blame. The FCC keeps a limited number of licenses under its hood, and releases them like a curmudgeon every time the world changes, which is more and more frequently, these days.

People: there is this think called a software-defined radio. It allows you to listen before you broadcast, so that you are not stepping on someone else’s signal. This and packet switching may do away with this “I have spectrum x through y, you have spectrum y through z” B.S. Does the FCC take any of this great work into account? Of course not.

The FCC is living in 1934. They are dinosaurs, along with all of the rent-seeking telecoms who live in this era.

Google is just trying to get a piece of the spectrum so they can use it for their own nefarious ends. Is this evil? Well, in a world where everything is stacked against the good guy, is it even survivable not to be evil? Will good raise the stock price? Will good attract customers? The default option is to do evil. Sorry folks. “Evil always wins, because good is stupid.”

It’s time to stop playing stupid, everyone. I don’t care who wins, although our chances are marginally better if Google wins, because they are not a fully entrenched tele-monopoly, and they may not, initially, know how the game is played. We may be able to sneak some apps on the Android phone which allows actual p2p communication, by-passing the central office.

We need to get SDR’s into the wild, and start hacking phones. Only when we have the power to decide what we can do with our phones will the telecom monopolies go away.

Yeah, I don’t think it’ll happen either.

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