Business Negotiations in Sprint Nextel Merger
Merging is the combination of more than one industrial or corporate entity to form a more formidable divestiture through the sale, distribution or redistribution of quoted shares of stock in a newly created larger single company. For the merged Sprint and Nextel Company in the year 2004, it appears the expected booming is almost taking a reverse lane owing to the fact that the customer based focus that characterized the individuality of the companies prior to the merging is diverged without a careful jealous guard on the uniqueness of each value.
The problem is the target at raising the summative Average Revenue per User above the first two leading wireless providers viz. the Cingular Wireless and the Verizon Wireless services The two companies are respectively, the first and the second leading wireless network services in United States of America. The expected problems to be placed on round table negotiation include the management and composition of the board of directors, the equal relative contributions from both ends that will substantially earn the approval of the Federal Communication Commission (led by Michael Powel), the anti-trust bodies and other concerned. Sprint aimed to close the wide third marginal gap between its second runners up if not surpassing to the top following the proposed merging. Above all, sustaining and increasing the capital with the customer base above 40 million pre-merging state from both ends was among the challenge ahead in its summary.
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The Sprint promised 15 million subscribers with additional 5 million (partly) through subsidiary affiliations while Nextel recruited over 20 million subscribers into the merging. Short of the expectation, the relative Average Revenue per User for the two companies before merging and thereafter rather rises so slowly as against the projected value owing to the shareholders’ withdrawer of interest resulting from consumer-based poor premium return after the merging. The direction of focus away from the walkie-talkie service on cell phone to attempt on strengthening the company’s laser ban wave (EV-DO Revision A and WiMAX) seems not to augur well with the consumers’ taste, so the consumers alleged. Part of the negotiation did omitted the objective overall individual sum before the merging but presuming about $70 billion worth of capital base with $36 billion from Sprint.
The merged company sees how to manage the automatic unfriendly customer reduction in the exchange ratio for the stock possession in each respective company prior to merging. This is inevitable as a temporary cushion. The target was pegged at speculative repair duration of six months. Moreover, as part of a bid to reduce the inconveniences, there appears another negotiation on working out tax-free local telecommunication operations for Sprint’s existing customers. The negotiation equally sees to regulate the executive board of directors to ensure equality of representation from both parties with perhaps, common interest. The agenda channeled focus on challenging the earlier mentioned two biggest network providers through the combination of expatriates in the two firms. The aiming was to cut short certain administrative expenses, professional negotiation on how to manage proposed reduction in both expenditures on sales and marketing towards eventual increase in savings and overall yearly turnout. Furthermore, the merging seizes to disclose how members of staff planned to be down sized though speculation later holds that Nextel suffer the larger brunt.
Conclusively, the merger dictates the running pace of the emerging larger Sprint Nextel firm through extensive negotiations on workable modalities to ensure increase long term investors’ benefit through convergence of interests such as; saving the administrative cost and reducing the work force but a failed target at increasing interested investors in the firm. The merger did not left out a resounding mutual input though the end turned expectedly slow rising target with perpetual forecast of increasing fall and investors exit.
Denise Pappalardo, 2007. Sprint still struggling to make Nextel merger work, NetworkWorld.com.Available at: www.networkworld.com/news/2007/010907-sprint-nextel-earnings.html
CNN, Sprint, Nextel in $36B merger, December 2004
Available at: www.money.cnn.com/2004/12/15/news/fortune500/sprint_nextel/
Mr Denise Pappalardo, Sprint Nextel Backs WiMAX, Network World, August, 2006.
Available at: www.networkworld.com/news/2006/081406-sprint-nextel.html?ap1=rcb
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