February 1, 2005  Email this 
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Sprint: What's Next(el)?
An improving wireless business and a pending merger with Nextel make Sprint (FON) an attractive buy, according to analysts at Thomas Weisel Partners.
Analysts upgraded the stock to "outperform" from "underperform" Tuesday, saying that the post-merger company, to be called Sprint Nextel, will be the best-positioned large telecom firm that they cover.
The two wireless telephone companies announced their marriage in December.
An emphasis on wireless services is the key to analysts' expectations for Sprint Nextel. "Wireless is the most attractive telecom services area for investors," analysts say. And, they note, Sprint Nextel will generate more revenues from wireless than any other large telecom company -- more than 70%.
Analysts say that Sprint's core PCS business has "improved dramatically" over the past couple of years. The company is gaining more new customers and holding on to more customers it already serves.
Sprint's revenues should also get a boost this year from a new kind of business: wholesale voice over the Internet partnerships (VoIP), say analysts. The company has signed deals with Time Warner, Mediacom and Charter to help launch the service.
Sprint says that its merger with Nextel is expected to close in the second half of 2005, pending approval. Thomas Weisel analysts say that once all transactions are complete, including the planned spinoff of Sprint's local telecommunications business, shares of Sprint Nextel should be worth about $29.
At $24, Sprint sells at about 17 times the average analyst's 2005 earnings per share estimate of $1.39. The company pays an annual dividend of 50 cents per share.
--Lisa Dixon
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