With the news that Sprint Nextel Corp. (NYSE: S - message board) chairman Tim Donahue would step down at the end of this year comes the prospect of more consolidation among the Big Four U.S. carriers. Sprint Nextel, which reported disappointing quarterly results and has seen its share price drop by 25 percent this year, could be looking at a buyout either by a rival wireless service provider or by a major cable company.
Last year Sprint signed a deal with a consortium comprising Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. , Cox Communications Inc. , and Advance/Newhouse Communications to bundle Sprint mobile phone service with the cable companies' existing high-speed data, voice and video packages. Sprint will invest $100 million in the joint venture, with the cable consortium putting up the same amount.
The nation's third-largest wireless carrier, Sprint Nextel has faced serious integration problems since the two companies merged in August 2005. Coming just two months after COO Len Lauer left the company, the departure of Donahue, who was CEO of Nextel before the merger, was not unexpected -- but it will do little to reassure Wall Street, which has shaved 25 percent off the troubled carrier's market cap since the start of the year. (See Sprint Cuts COO.)