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Sprint close to finding Nextel buyer, hurdles appear

updated 12:50 am EDT, Fri October 3, 2008

Sprint selling Nextel soon

Sprint has discovered several interested parties who wish to purchase its Nextel business unit, but the wireless provider is facing several obstacles before the sale can be finalized. The Wall Street Journal reports that Sprint's $35 billion 2005 purchase would likely see a deal in the area of $5.4 billion at least, due to the amount of debt that would come with the acquisition. Interested bidders have expressed some resistance to this expense, unless the equity included in the deal were insubstantial in comparison.

In addition to the above issue, separating Nextel from Sprint will be a costly procedure, since over the past few years, Spring has integrated Nextel's billing and customer service departments with its own systems. Sprint may also have trouble offloading the debt, due to contractual obligations.

Insiders say that NII and Cerberus Capital Management are among the bidders, with several other private firms showing interest as well.

The current credit issues in the US would also make a deal difficult to negotiate, since financing will have tighter restrictions. Operating expenses could be prohibitive as well, with about 30,000 cell towers in the US.

by MacNN Staff



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