Analysis of Sprint and Nextel Merger

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ANALYSIS OF SPRINT AND
NEXTEL MERGER IN AUGUST 2005

TABLE OF CONTENTS
EXECUTIVE SUMMARYiii
INTRODUCTION1
ANALYSIS OF MERGER2
BEFORE THE MERGER2
AFTER THE MERGER4
CUSTOMER SERVICE SURVEY9
CONCLUSIONS13
RECOMMENDATIONS14
APPENDIX16

LIST OF FIGURES
FIGURE 1. 2005 TIMELINE OF SPRINT/NEXTEL LEGAL ISSUES6
FIGURE 2. MARKET SHARE7
FIGURE 3. CURRENT SPRINT/NEXTEL CUSTOMERS9
FIGURE 4. REASON(S) FOR LEAVING SPRINT/NEXTEL AFTER MERGER10 FIGURE 5. SATISFACTION OF CURRENT SPRINT/NEXTEL CUSTOMERS11 FIGURE 6. CHANGE IN CUSTOMER SATISFACTION POST-MERGER12

EXECUTIVE SUMMARY
Purposes of the Report
The purposes of this report are to (1) address the problems Sprint and Nextel incurred before the merger, (2) discuss the merger itself, (3) determine problems that arose as a result of the merger, (4) determine if the merger fixed previous problems by collecting primary data from consumers through a survey, and (5) recommend ways to alleviate the problems. The Sprint Nextel Merger

In August 2005, two major telecommunication providers, Sprint and Nextel, merged into the third leading wireless carrier known as Sprint Nextel Corporation. Executives believed the merger would bring greater success to Sprint Nextel, than remaining as separate entities. Both Sprint and Nextel experienced problems before the merger. Sprint was accused of billing problems, unauthorized charges, poor customer service, and weak signal strength. Nextel faced similar problems. They too were accused of poor customer service, billing discrepancies, cancellation difficulties, and unethical sales practices. As expected, both problems and benefits arose from the merger. Profit and market share increased. New customers were added, which gave Sprint Nextel Corporation a more competitive position in the wireless industry. However, new problems added to the existing problems of the two companies. Affiliate companies operating under Sprint and Nextel are suing on the grounds that the merger breached their contract. In order to solve this problem, Sprint is buying all of their affiliates. Also, Sprint and Nextel are operating under different technologies and are currently working to integrate the two. Survey

We created a survey that asked previous and current Sprint customers if they were/are satisfied with different aspects of the services they received or are currently receiving. This enabled us to pinpoint Sprint’s weaknesses and determine if the merger added to Sprint’s problems or alleviated previous problems. Our survey confirmed that many customers left Sprint after the merger because they were dissatisfied with some aspects of the company. However, many of them remained customers because of the increase in service areas and signal strength. Recommendations

1.Improve Customer Service
a.Track phone calls with e-mails
b.Employ more customer service representatives, especially at peak times 2.Extend coverage area
3.Strengthen wireless signals
4.Design an itemized bill with a complete explanation of fees 5.Integrate Sprint and Nextel’s separate technologies
6.Improve product quality to compete with other providers
ANALYSIS OF SPRINT AND
NEXTEL MERGER IN AUGUST 2005

INTRODUCTION
Companies around the world are beginning to discover new ways to decrease competition and gain market share through mergers. In the first quarter of 2006, merger volume in the United States was $331 billion, a 19 percent increase from the first quarter of 2005 (Dolbeck, 2006). This trend has escalated rapidly in the past few years and continues to revolutionize businesses today. In December 2004, two major telecommunication providers, Sprint and Nextel, merged into the third leading wireless carrier known as Sprint Nextel Corporation, behind Cingular Wireless and Verizon Wireless (Sprint-Nextel Deal?, 2004). Sprint’s President and CEO, Gary Forsee, was named CEO of the newly created company. The CEO of Nextel, Tim Donahue, serves as the...
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