Don't Buy Sprint-Nextel's Spin on "Spinco"
Many rural customers in Tennessee depend on Sprint-Nextel for their local phone service. As Sprint-Nextel prepares to spin off its local phone operations next year, those customers—who already have seen the quality of their phone service decline—have a big stake in the future health of the new, independent local service company.
But that future doesn't look bright, based on Sprint-Nextel's plan for the spinoff. Tennessee regulators, who must approve the plan, need to take a hard look at the details, because Sprint is setting that new company up for failure. Here are the facts:
• Based on filings in some states, Sprint-Nextel offers no business plan whatsoever for the future growth and viability of "Spinco" (the temporary slang name Sprint managers use for the as-yet unnamed company).
• Having already siphoned off over $9 billion from its profitable local operation from 1998 to 2004 to invest in its wireless and data networks and to purchase Nextel, Sprint now plans to burden the new "Spinco" with more than $7 billion of Sprint-Nextel's debt.
• Sprint-Nextel has imposed a no-bid sales agreement on "Spinco" that mandates the new company can only offer Sprint-Nextel wireless and long distance when it sells bundled services to future customers.
Regulators need to examine whether other carriers would have offered a better deal to "Spinco" and local customers. Why would Sprint put the new spun-off local phone company at a disadvantage? Well, "Spinco" will actually be a competitive rival to Sprint-Nextel in the future as many customers consider dumping their landline phone service in favor of wireless. And unloading billions in debt onto "Spinco" sure will help the Sprint-Nextel bottom line.
But Sprint-Nextel's greed isn't just affecting customers. It's hurting employees, too. Sprint wants to slash our health care benefits, cut disability benefits in half, take away overtime pay when we're required to work Sundays, and reduce time off with our families. It's why local telephone workers have gone on strike against Sprint-Nextel.
Sprint-Nextel wants to run roughshod over employees and abandon rural America, leaving us with even worse service—and possibly a bankrupt local phone company. We can't let them get away with it.
Contact the Tennessee Regulatory Authority at 1-800-342-8359. Tell them to reject the spinoff scheme unless Sprint-Nextel takes steps to ensure that rural customers have quality and affordable local phone service for years to come. To view full ad, click here. (Acrobat 180K)
