[terryjohnson16]

Sprint up after report of SK Telecom's interest | Reuters

Sprint up after report of SK Telecom's interest
Mon Jul 9, 2007 11:37PM EDT

By Kim Soyoung and Euan Rocha

SEOUL/NEW YORK (Reuters) - Shares in Sprint Nextel Corp. (S.N: Quote, Profile, Research) surged on Monday in after-hours trade following a report that South Korea's top telecoms operator, SK Telecom Co., was preparing to bid for the No. 3 U.S. wireless firm.

SK Telecom (017670.KS: Quote, Profile, Research) denied the report in the Korea Economic Daily, while bankers and analysts ruled out a full takeover by SK Telecom, whose $18 billion market value is less than a third of Sprint Nextel's $62 billion.

Sprint shares settled more than 4 percent higher in after-hours trading in New York after briefly rising more than 14 percent following the close on Wall Street. Shares in SK Telecom (017670.KS: Quote, Profile, Research) jumped nearly 4.5 percent in Seoul early on Tuesday.

Analysts said SK may be eyeing a small stake in the U.S. carrier.

"The investment size is likely to come to less than 1 trillion won ($1.1 billion) for some shares in the company, considering the huge market value of Sprint," said Yoo sang-rok, a telecoms analyst at Daewoo Securities.

The Korea Economic Daily cited brokerage sources as saying SK Telecom had been contacting several private equity funds during the first half of 2007 about a joint bid for Sprint Nextel.

SK Telecom is seeking growth outside its home market, where four out of every five people have a mobile phone. It runs a wireless joint venture with EarthLink Inc. (ELNK.O: Quote, Profile, Research) in the United States and made a $1 billion investment in China Unicom Ltd.'s (0762.HK: Quote, Profile, Research) (CHU.N: Quote, Profile, Research) bonds last year, which gave it an option on a nearly 7 percent stake in China's No. 2 mobile firm.

However, its U.S. business has yet to turn around and SK Telecom said last week it and EarthLink were to inject additional funds of up to $100 million each in Helio, which rents network space from Sprint.

SK DENIES TAKEOVER INTEREST

An SK Telecom executive said the report was "groundless" and the firm was not considering a hostile takeover of Sprint Nextel.

Cindy Kang, an SK spokeswoman, also said the company would later file an official denial with the local stock exchange.

"We have no idea where and how the rumor has started, but it is not true," Kang said.

Sprint Nextel declined to comment.

The U.S. carrier has been the target of takeover speculation since May after smaller rival Alltel Corp (AT.N: Quote, Profile, Research) agreed to a $25 billion buyout, although several industry experts said they doubted private equity buyers would have the appetite for a company whose market value is about $62 billion.

"A bid for Sprint would be too much of a burden for SK Telecom to bear," said Kim Kyung-mo, an analyst at Mirae Asset Securities. "One trillion won in investment would be a big deal in emerging markets but nothing in the developed market."

Others said a minority investment in Sprint Nextel looked possible given SK Telecom's push for growth overseas.

"A partial investment looks very likely as SK Telecom has been trying in vain to boost its business in the United States," said an M&A banker in Seoul, who declined to be identified.

"It won't be difficult for SK Telecom to find financial partners, although given Sprint Nextel's big market cap, the stake size could be limited," the banker added.

By 0308 GMT, SK Telecom shares were up 4.47 percent to trade at 210,500 won. Shares in Sprint Nextel were last quoted at $22.42, up about 4.4 percent from the market close in afterhours trade.

(Additional reporting by Kim Yeon-hee)

[Nwahs]

So any new news on this? From what I can tell, this went no where and Sprint is still owned by...themselves?

[IronChef]

I wouldn't be surprised if it was true, but considering the amount of time that has passed, it seems doubtful it will actually occur.

Sprint has had a lot of troubles since they bought Nextel. I imagine they didn't understand that the operating costs of running two incompatible networks, two separate supply chains, two separate sets of sales channels, two separate everything..

I imagine C-level employees were blindsided with the ARPU numbers and failed to understand the technological reality of the endevour. They tried to change to a common billing platform- Amdocs to ease the pain, (Strangly, but equally important is the same platform of Legacy Nextel, The New AT&T, and T-Mobile) but I imagine the growth from common operations strategy, promised to investors, was never realized on the balance sheet.
http://www.bizjournals.com/kansascit...ml?jst=s_cn_hl

Unfortunately it seems these efforts wasn't enough. Forsee left, and Sprint dissolved their relationship with Clearwire--
http://quicktake.morningstar.com/sto...aspx?id=209526
http://www.kansascity.com/105/story/354668.html

Seems like they want to be bought by someone. I imagine that SK Telecom walked away from the deal when they started looking at the balance sheet. I can't blame them.

[milkbone98]

Never happen, SK Telecom isnt capable of that. http://www.phonenews.com/content/view/2226/9/
However, they did make one move... http://www.phonenews.com/content/view/2498/9/

[Nwahs]

Yep, I think it is settled...no one is going to be buying any of the big 4 as of right now. However...that doesn't mean anything in the future...but there are next to no signs right now that any of the big 4 will be up for sale

[dkb218]

Well, I guess some more shopping is in order:

Nov. 29 (Bloomberg)
By Linda Shen and Crayton Harrison

-- Sprint Nextel Corp. rejected a $5 billion investment offer from a group led by South Korea's SK Telecom Co. that would have made former Chairman Tim Donahue the company's chief executive officer, the Wall Street Journal said.

Donahue and the investment group, which also included Providence Private Equity Partners, made the offer in a letter before Thanksgiving, the paper reported. The bid took the form of securities that would eventually convert into equity, at a level 20 percent to 30 percent higher than Sprint's current share price, the Journal said.

Sprint, the third-largest U.S. mobile-phone company, has been searching for a new CEO since Gary Forsee departed in October. The company lost 337,000 contract subscribers last quarter after dropped calls and service problems sent customers to larger rivals AT&T Inc. and Verizon Wireless.

The Sprint board is reluctant to rehire Donahue, blaming him for problems stemming from Sprint's 2005 purchase of Nextel Communications Inc., the Journal said. He was Nextel's CEO before the acquisition.

The board didn't meet with Donahue or the investors before turning down the deal, the newspaper said. Sprint spokesman James Fisher declined to comment when contacted by Bloomberg News. SK Telecom spokeswoman Lauren Kim didn't immediately respond to an e-mail before normal business hours in Seoul.

Sprint, based in Reston, Virginia, rose 44 cents, or 3 percent, to $15.20 at 4 p.m. in New York Stock Exchange composite trading. The shares have fallen 20 percent this year.

Keeping Customers

Sprint plans to improve customer retention in the current quarter, acting CEO Paul Saleh said last month. The company will offer more customer-service features online and sell new phone models on Nextel's network, he said.

Shareholders, including Ralph Whitworth of Relational Investors LLC, have urged Sprint to focus more on improving the operations of its mobile-phone business. After Forsee's departure, Sprint dropped plans to work with Clearwire Corp. to build a new high-speed wireless network. Sprint continues to construct the network by itself.

SK Telecom, South Korea's largest mobile-phone operator, is seeking investments outside of its home country, where almost nine out of 10 people already have a wireless handset. Chief Executive Officer Kim Shin Bae said in an interview last month that the company was reviewing ``various collaboration options'' with Sprint.

Helio LLC, SK Telecom's U.S. venture with Atlanta-based EarthLink Inc., hasn't made a profit since it started in May of last year. The venture uses Sprint's network to sell wireless services.

[Nwahs]

Ahh nice find. Sprint needs to get their stuff together soon or else they are going to keep this downhill trend.

[CA girl]

I hope I can keep my plan - even through a buy-out.