Embarq CFO reiterates plans to shutter wireless MVNO: Sprint Nextel loses another

Embarq Holding Co. L.L.C.’s CFO Gene Betts confirmed the company’s plans to wind down its wireless offering that currently runs on former parent Sprint Nextel Corp.’s network. Betts, speaking at a Morgan Stanley investor conference yesterday, noted the company is in the process of slowing the sale of wireless handsets and that the service would likely be discontinued by the middle of next year.
Embarq said it served 112,000 wireless customers at the end of the first quarter through a mobile virtual network offering with Sprint Nextel that launched in mid-2006. The company had originally planned to serve as many as 1 million wireless customers, but after some initial strong growth, watched its wireless growth flatten over the past several quarters.
“The decision to wind down the MVNO was essentially driven by the economics of the business model,” said Embarq CEO Tom Gerke when the company released its first quarter results late last month. “Strategically, we continue to believe in the value of integrating wireline and wireless service. In fact, we already have two integrated calling features available to consumers today that work with any carrier wireless service.”
Betts echoed Gerke’s intention to continue to support its wireless customers, and said the company is looking at possibly migrating its wireless customers to another carrier’s network.
Embarq’s struggles with wireless are similar to ones voiced by Qwest Communications International Inc., which recently announced plans to move its 800,000 wireless customers from Sprint Nextel’s network to Verizon Wireless beginning this summer. Qwest plans to have the transition completed by the first quarter of 2009 when its current MVNO deal with Sprint Nextel expires.