The restructuring of Sprint PCS

Sprint takes full control of digital wireless group as cable partners bow out.

By Denise Pappalardo
Network World, 6/8/98

Kansas City, Mo. - Just a few short years after the formation of Sprint PCS through a partnership of Sprint Corp. and three prominent cable television companies, the joint venture is no more.

Sprint is taking full control of Sprint PCS by buying the stock held by its cable television partners Tele-Communications, Inc. (TCI), Comcast Corp. and Cox Communications, Inc., which will end the four-year partnership with them.

Specifically, Sprint plans to issue shares of a new common PCSstock to the cable partners in exchange for their interest. Sprint will offer more stock in an initial public offering (IPO) later this year. The Sprint PCS IPO is expected to raise between $500 million and $1 billion, the company said.

The three cable companies were no longer interested in pursuing the wireless service market that Sprint PCS targets with its digital personal communications services, said Tom Murphy, a communications director at Sprint PCS.

Aside from creating Sprint PCS stock, Sprint is integrating Phillie Co., a regional wireless carrier that was owned by the joint venture, in to Sprint PCS.

The restructuring of Sprint PCS is expected to bring new and more focused capital to the wireless communications company, said Bob Egan, a director at Gartner Group, Inc., a Stamford, Conn.-based consulting firm.

It will be easier for Sprint PCS executives to decide how to spend company money and what new services to offer without having to consult three cable partners that may not have the same agenda, said Simon Reeves, senior analyst at Decision Resources, Inc., a Waltham, Mass.-based consulting firm. This may be the biggest impact for Sprint PCS customers, he said.

And users expect Sprint to continue improving services.

"Sprint PCS offers low-cost calling plans because their network is larger than most," said Nancy Crilly, the ultrasound group facilities manager at Issaquah, Wash.-based Siemens Medical Systems, Inc. "But, they still need to do more."

While Crilly credits Sprint PCS with low-cost service offerings, she does not like the fact that when she drives outside of a major metropolitan area, her calls are often dropped.

This happens because in areas where Sprint does not have digital antennas, digital calls are transferred to analog antennas where calls are often dropped. "Most wireless carriers will tell you this doesn't happen with their services, but it actually happens with most," said Reeves of Decision Resources.