Sprint Mulls Shedding Nextel Unit

Wireless provider Sprint Nextel Corp. is considering spinning off or selling its ailing Nextel unit. The move would be a dramatic acknowledgment that Sprint's $35 billion acquisition of Nextel Communications in 2005 has been a failure. Sprint is said to be contemplating a couple of options for Nextel. The company has held preliminary talks with Nextel founder Morgan O'Brien, who now runs a company called Cyren Call Communications in McLean, Va., that is trying to create a nationwide wireless network for public-safety communications. People familiar with the discussions say Mr. O'Brien is trying to assemble a consortium of investors to acquire Nextel. Cyren Call itself wouldn't be the buyer. Sprint is contemplating other possible buyers, such as private-equity firms. The company could also choose to spin off Nextel into a separate company. Activist investor Ralph Whitworth of Relational Investors, who obtained a seat on Sprint's board earlier this year, has advocated a sale or spinoff. Nextel's walkie-talkie-style phones have traditionally been popular with construction workers, airline maintenance personnel and other business users. But the market for those services is shrinking. People close to the company project Nextel will have a core, highly loyal user base of five million to seven million subscribers in two years, about half of current levels. A decision last week by the Washington, D.C., Circuit Court of Appeals may exacerbate that situation: The court ruled that by June 26, Nextel must stop using certain radio frequencies that are close to those used by first responders.
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