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New Sprint Nextel CEO Must Focus on Customers and Marketplace Competition

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Yankee Group today said that Sprint Nextel Chairman and CEO Gary Forsee's resignation on October 8 revealed the company's struggle with customer care, network performance and internal issues among the operational challenges associated with the $35 billion Sprint Nextel merger. As the Sprint Nextel board evaluates various candidates for new leadership, it will be imperative for the board to set a clear direction and establish priorities for the company and its new CEO.

According to the recently published Yankee Group Note, What's Next for Sprint Nextel, Yankee Group believes it may make more sense for Sprint Nextel to spin off Xohm into a separate entity jointly owned by Clearwire, which is better suited to the startup nature of its new mobile internet business model. This is contrary to what some Wall Street analysts predicted that the WiMAX network deployment and business initiative may be slowed or placed on hold.

Additional recommendations for Sprint Nextel's new CEO priorities include:

  • Make Sprint Nextel more competitive: Any new CEO must focus on the basics of the wireless customer experience to minimize churn, rebuild customer care and reinvigorate subscriber acquisition.
  • Put customers at the top: Forsee allowed the performance and customer satisfaction with core mobile services to decline. This needs to be turned around.
  • Prioritize capital and network investments: This includes its global IP backbone, enhancing its CDMA network, rebranding its iDEN network and deploying its WiMAX network. The company has too many network assets that all require capital investment that are difficult to support with current debt ratings.
  • Consider other possible transactions: Such transactions that could substantially enhance shareholder value include the sale of other non-core network, tower and business assets, as well as a possible combination with complementary CDMA-based wireless operators such as Alltel.

"No one was surprised when the Sprint Nextel board of directors announced Gary Forsee's resignation. Clearly there were several concerns among the board, but additionally, the merger had taken too much of the focus off its customers," said Berge Ayvazian, Yankee Group chief strategy officer. "There is a major challenge ahead for the new CEO at Sprint Nextel. The new CEO must leverage the company's relatively strong position in existing data services to enhance ARPU. The increasing emphasis on MVNO relationships and sub-prime customers only threatens margins and increases exposure to bad debt."

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Tags: clearwire  sprint nextel  mvno  alltel  customer care  iden  nextel  yankee group  tower