In October Sprint announced a $15.5 billion four year deal to carry the iPhone and keep pace with its larger competitors AT&T
Sprint Chief Executive Dan Hesse was "hours away" from announcing a deal to buy MetroPCS until the board vetoed the acquisition last Wednesday, according to Friday reports by CNBC. Analysts now say that while an acquisition of MetroPCS and its pre-paid cellular service competitor Leap Wireless (LEAP)
Sprint's inability to cut a deal, taken with weaker than expected fourth quarter industry profitability, may signal that wireless carriers are struggling to find returns on surging iPhone sales, which drove record quarterly profit at Apple. The Sprint deal also may highlight new reasons why failed consolidation is a possible industry game changer, even as analysts and investors expect 2012 deals.
"As the failure of this transaction makes clear, Sprint's ability to play the consolidator role is highly uncertain, at least any time soon," writes Craig Moffett of Bernstein Research in a Monday note reacting to the failed Sprint and MetroPCS tie-up. That's because Sprint may need billions to invest in its Clearwire 4G service build, while the company paid a hefty price to carry the iPhone. "
Still, according to analyst price targets Sprint and Clearwire are two wireless plays with high risk and reward on their success of a now closer-tethered spectrum partnership.
Sprint and Clearwire shares fell less than 1% in Monday trading to $2.45 and $2.10, respectively. Sprint shares are up roughly 10% year-to-date but have dropped over 40% in the last 12 months, while Clearwire shares have posted a smaller 8% 2012 gain to go with a near 60% stock drop in the last 12 months.
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