Sprint rumored to be considering Vonage purchase

At the same time that embattled VoIP provider Vonage attempts to reorganize and cut costs during the company's darkest hour, rumors are beginning to fly that an acquisition may be imminent, and at the top of the list of potential buyers is none other than Sprint-Nextel. You see, not only does Vonage need to litigate its way out of the Verizon mess, it's facing yet another potential setback in September (if it even lasts that long) when an infringement lawsuit brought by Sprint is scheduled to begin. So even if Vonage manages to to fight off the impending permanent injunction, Sprint is waiting in line to take a bite as well, and now Light Reading is reporting that company execs may decide that the best way to settle this dispute is to simply sell Sprint the keys to the office. Now it's pretty obvious why Vonage would want to cash out and dump its mess on another firm, but what does Sprint have to gain from such a deal? It's not clear why the wireless carrier would want to get into the internet telephony game at this point, and even if it did, the court may soon rule that in effect, Vonage doesn't even have anything worth selling -- except maybe its customer list. Obviously we'll be keeping our eye on this, because we have to admit, Vonage is a lot more fun to cover now than it used to be.

[Thanks, Travis]

[ScOObyDoo @ Apr 17th 2007 8:40PM]

Ah great. I can already hear the insane woo woo woo commercials trying to get people to signup for Spronage.

[blah @ Apr 17th 2007 8:42PM]

well sprint-nextel may have some assets to support the vonage customers that do NOT infringe on verizon's patents. sprint-nextel then gains a foothold in households and possibly build see some gains in their wi-max expansion

[Kev50027 @ Apr 17th 2007 8:49PM]

Haha! I like "Spronage". nice name.

I don't understand their reasoning. "Lets buy a total failure and inherit their legal troubles so we can sink millions into this useless venture right before they crash and burn".

[Josef F @ Apr 17th 2007 11:29PM]

Except that it's not a total failure. A lot of people (myself included) were very happy with the service. Verizon (*spit*) can't compete so they decided to litigate.

[Mike @ Apr 17th 2007 8:54PM]

Sprint would buying landline customers; they have a lot of options after that - either use their tech to beat the Verizon suit, convert them to some sort of home-cellular technology, or try and beat or stall Verizon in court long enough to do what blah suggested - switch them to wimax. Vonage customers have already shown they are willing to try some new technology. That might be attractive enough to Sprint to buy.

[Phigmeta @ Apr 17th 2007 8:55PM]

Actually this makes perfect sense from Sprints perspective.

lets pretend that we are 5 years into the future:

2007 - Sprint buys the nations largest VOIP provider
2008 - Sprint begins limited rollout of WiMax
2009 - Sprint begins rollout of WiMax Highspeed
2010 - Sprint offers the SPRINT TOTAL PACKAGE giving you highspeed mobile data and voice and video

[GadgetAddict @ Apr 18th 2007 6:20PM]

I heard this on a number of Podcast I listen to. Selling packages, that what a lot of telecom companies are doing.

[Alan @ Apr 19th 2007 5:29PM]

I think Sprint would be able to "start from scratch" in terms of VoIP offerings better than they could acquire customers through Vonage. From the business sense, it would only make sense for Sprint to acquire Vonage if it would permit Sprint to *grow profit* at a faster rate than it could by organically entering the market, or if that the growth is attained at a cost less than it would cost to grow organically. Sprint would have to have some kind of advantage in its return to make sense. I'm not a financial expert with the companies, so I can't say for sure what the advantages/disadvantages might be.

[Tim @ Apr 17th 2007 9:11PM]

I foresee widely broadcast broadband becoming as ubiquitous as cell phone signals nowadays in the future. If Sprint can move their mobile phones over to those already available conduits, they could save a ton of money on maintenance and undercut the competition while still making a large profit. Sprint could even install Wifi antennas on their existing cellphone towers to make sure their coverage is widespread without having to spend so much as installing new infrastructure.

WiPhones (Pardon the pun) could even operate in foriegn countries Sprint doesn't provide service in, guaranteeing customers can spend money with Sprint anywhere. Granted, if Sprint was feeling evil, they could charge more for those with foreign IPs.

The only problem I see is making it work like a cell phone so you can switch broadcast sources without breaking the call. WiMax is supposed to fix that, though.

[Kevo @ Apr 17th 2007 9:17PM]

This isn't news. Vonage is basically free at this point.

[Thundernad @ Apr 17th 2007 9:33PM]

Well sprint is beginning to be pretty well known for poorly thought out purchases, *cough nextel*.

[phigmeta @ Apr 18th 2007 2:37AM]

actually the nextel purchase is genius ....

why ... well they got the customer based from nextel and then (for about the same price of purchase - over 10 years) is selling the old iden system ... leasing rather to the Homeland security folks)

Tim - cross network call control has been fixed a longtime ago using SIP (tmobile uses it out here for the WIFI-GSM phones)

[Thundernad @ Apr 18th 2007 2:59AM]

Getting the nextel customer base was an excellent idea, however sprint really dropped the ball by not merging billing systems sooner, attempting 6:1 compression on iden towers dramatically decreasing the quality of service, and just generally pissing off that entire customer base with really shitty customer care. Now they are trying to backpedal and fix all of the issues with the iden side of things, but I feel for the most part is too late.

And last I checked sprint just lost $20billion worth of government contracts to competitors: http://www.engadgetmobile.com/2007/03/30/sprint-loses-20-billion-government-contract-to-rivals/

And the really crappy thing is sprint has to be spending a TON of money maintaining and even upgrading a second network, when on the cdma side of things they have one of the best networks of any carrier. The real trick is getting all the iden users on cdma without pissing everyone off, not an easy task.

[Slackarena @ Apr 17th 2007 9:57PM]

i work for sprint, at least i will until next tuesday. thats when sprint will be selling my kiosk along with many others to a 3rd party company, and forcing us to work for them. its nice to know that sprint feels like it has enough money to justify buying a doomed company, but is cheap enough to literally sell their employees. well done sprint, well done indeed.

[Thundernad @ Apr 17th 2007 9:59PM]

@ Slackarena

Agreed. They just laid off 5000 retail employees to "improve" customer service.

[Linkdumptube.com @ Apr 17th 2007 10:08PM]

I bet sprint IS going to purchase. i'm pretty confident about this.

[Homer J @ Apr 17th 2007 10:44PM]

Uh, with 2.2 million subscriber lines, the company's cashflow is somewhere between $33M and $55M / month. While I would imagine that Vonage is probably not going fetch any high multiples if sold, the subscriber base is surely worth something to someone, especially if they can solve this problem with Verizon and and cut some costs.

[Jason @ Apr 17th 2007 11:05PM]

This is great news! Ever since Sprint sold off their landline business, they have been trying to figure out how to hemorrhage home phone customers too.

Sprint has a keen eye for mergers, maybe they should take a look at Chrysler while they're at it.

[TheClashRocker @ Apr 18th 2007 12:10AM]

It all makes sense.

Sprint is a crappy service (especially reception) and they already bought out another crappy service aka Nextel. So, now theyre goin for a crapola trifecta.

[Andrew Baisden @ Apr 18th 2007 8:04AM]

I could care less who owns Vonage just as long as its 24.99 for unlimited everything.

[citizentony @ Apr 18th 2007 3:41PM]

Same here, though, as long as they keep the $15 plan.

[Rob @ Apr 19th 2007 8:35AM]

It looks like Vonage will now win the appeal - it has come out that the patents Verizon took out were based on information originally published by independent parties on the "VOIP forum". Now Verizon may get sued for copyright infringement and using that information for their patents.

Story: http://www.itworld.com/Net/3303/070418verizonpatent/

[jeeplikens @ Apr 30th 2007 10:12AM]

Sprint had to sell off it's local service when they got nextel. Not sure why, ATT wasn't forced to dump anything, nor did Verizon. So, maybe this is Sprints way of thumbing it's nose at the FCC and get back into the home system. I think I seen somewhere where with sprint moving away from frame relay and ATM to a all IP network, including it's wireless system, one has to wonder what they have up it's sleave. Big deal about Nextel. Nextel was dying anyway or would have been dead by 2010 (longer then what some initally said). It's iDen network was having problems before Sprint stepped in and has been moving voice traffice onto it's network hoping to keep the walkie-talkie system going a little longer. Public service freq's/antennas is what's at the root of nextels dropped calls and network issues, not Sprint as some will claim. People seem to forget that Sprint kept it's wireline backbone intact and has been building it's IP ability for a couple of years now. Taking Vonage onboard wouldn't be a bump in the road for Sprint and if they do, VZ will standing there dumbfounded. VZ too has done some stupid stuff in the past. People just seem to over look it.