Qwest wireless biz boon to VZW, loss to Sprint Nextel

Qwest Communications International Inc. could take its 824,000 wireless subscribers from Sprint Nextel Corp.’s network to CDMA rival Verizon Wireless next year when its current mobile virtual network operator agreement expires, according to media reports.
Such a move would give both Qwest and Verizon Wireless future growth opportunities. The loss of Qwest’s business is seen by analysts as a blow to Sprint Nextel.
Qwest follows an MVNO business model, leasing network capacity from Sprint Nextel’s CDMA network to offer service plans and handsets to retail and business customers. The two cut their current deal in 2003.
Qwest could use a deal with Verizon Wireless to grow its mobile broadband business and stem the loss of wireline subscribers — and it wants to move swiftly, according to Qwest’s relatively new CEO, Ed Mueller, who met with analysts in New York on Monday.
“Initially the deal would represent the current 824,000 Qwest wireless subscribers, but should expand over time,” Cowen and Co. analyst Tom Watts wrote today in a note to investors. “A deal could also help Qwest offset wireline access line losses with Verizon’s unlimited wireless plans (announced last week). Near-term financial impact is expected to be minimal for Verizon, while growth potential should be more meaningful.”
Watts said that if Qwest co-brands services with Verizon Wireless, it would help Qwest, with business in 14 states, improve its market share. As Verizon Wireless rolls out next-generation services, that effect would increase, the analyst said. In 2005, Qwest sold off its spectrum licenses to Verizon Wireless for $418 million.
Sprint Nextel CEO Dan Hesse is set to deliver the carrier’s fourth-quarter results tomorrow and is expected to reveal more of his plan to revive his company’s fortunes.