In 2004, Sprint and Nextel agreed to a merger worth $35.17 billion dollars. This move took place in a time where mergers were prevalent in the field of telecommunications. “Team up or get smashed” was advice given in a 2004 Business Week article. Prior to the merge, Cingular acquired AT&T, making them the largest cellular provider in the country; leaving Sprint in third place, and Nextel in fifth. In 2005, the companies finalized their deal, and came forward with their new corporation: Sprint Nextel.
Immediately after the merger, Sprint Nextel received negative responses from affiliates who sold their products. These affiliates sold products under both Sprint and Nextel names, and saw the merger as a threat to profits. These fears prompted antitrust lawsuits against the company, leading Sprint Nextel buyout seven affiliates in 2005 and 2006 to the tune of 14 billion dollars.1
In 2005, Sprint Nextel ranked last in customer service from J.D. Power and Associates. The company lost one million subscribers in 2007, as ” Customers began to perceive that the company's rivals had higher-quality phones and better network reception.”1 In December of 2007, Sprint Nextel named Daniel Hesse as their new Chief Executive Officer. "We weren't talking about the customer when I first joined," said Hesse. At the start of Hesse’ position, the stock of the company was down 66%, due predominantly to customer service issues. "Now this is the No. 1 priority of the company" Hesse reassured.
In 2009, Sprint Nextel acquired pre-paid phone carrier Virgin Mobile for $438 million, in an effort to capitalize on the growing trend of contract-free cell phones. Given Virgin’s lower prices and profit margin’s, analyst Christopher King questioned Sprint’s decision, “The lingering question of what Sprint 'wants to be when it grows up' resonates more than ever with us following this transaction announcement."
“Why Sprint and Nextel