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Sprint-Nextel May Up Price for Cable Deals

12/17/2004 8:33 AM Eastern

Sprint Corp.’s proposed $35 billion acquisition of Nextel Communications Inc. might not have a big impact on any possible wireless deals with MSOs, but it could mean that any joint ventures would be more costly for cable operators.

The Sprint-Nextel deal will create the third-largest wireless carrier in the nation, behind Cingular Wireless and Verizon Wireless. With added muscle, a combined Sprint/Nextel could prove to drive a hard bargain with cable operators, which are intent on adding a wireless component to their bundle of voice, video and data products.

Cable operators have been vocal in their desire for a wireless product, but one that would be different than just reselling cellular-telephone service.

Both Comcast Corp. and Time Warner Cable have expressed interest in a wireless product that would allow a voice-over-Internet-protocol phone to do double duty as a wireless handset outside of the home. And both Sprint and Nextel have said publicly that they would be willing to hammer out a deal to provide such as service.

Sprint also has local-phone-service deals with Time Warner Cable and Mediacom Communications Corp. to provide backbone services to their VoIP offerings.

In a press conference announcing the Nextel deal, the CEOs of both companies said those relationships would remain intact. And they reiterated their interest in providing some type of wireless service to the cable industry.

Cable operators created an informal consortium earlier this year to investigate forming a joint partnership with one of the top three wireless carriers – Sprint, Nextel and Deutsche Telekom AG-owned T-Mobile USA Inc. -- or even acquiring a carrier.

While the Sprint/Nextel deal would put to rest the possibility of acquiring one of those companies, it doesn’t rule out a joint venture between the combined company and the cable consortium.

For more on the Sprint/Nextel deal’s impact on the cable industry, please see Mike Farrell’s story on page one of Monday’s issue of Multichannel News.

 

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