After months of speculation over what would happen to Sprint PCS’ GSM network in Washington, D.C., Omnipoint Corp. and VoiceStream Wireless Corp. have agreed to purchase the network for an undisclosed amount, saving their Global System for Mobile communications customers from a potential black hole in that market.
According to sources close to the purchase, the carriers had been negotiating the transaction for months. Sprint PCS, after converting GSM customers to the Code Division Multiple Access network it launched last year there, had planned to shut the network off by the end of November, and Omnipoint and VoiceStream were trying to work out a deal to keep the network up and running prior to buying the equipment. Omnipoint and VoiceStream expect to complete their merger plans early this year.
Though the value of the deal was not disclosed, Sprint PCS said it received a hefty enough price for the equipment to offset its investment in the GSM network.
“It made more sense to get economic value out of the investment we had made,” said Tom Murphy, director of media relations with Sprint PCS. “We already moved customers over, and our competitors would have entered the market anyway.”
Omnipoint plans to purchase East/West Communications Inc., giving it access to another 10 megahertz of spectrum in Washington, D.C. Omnipoint already owns a basic trading area license in that market.
Sprint PCS, which once held a 58.5-percent stake in the Sprint Spectrum network, purchased the remaining shares of its partnership with pioneer’s preference winner American Personal Communications last January to make the GSM venture wholly owned by Sprint PCS. Last year, Sprint PCS launched CDMA service alongside the GSM network.
Sprint PCS began notifying customers in July of the network changes and swapped out GSM handsets for free CDMA phones. The carrier’s swap-out efforts created negative publicity when customers were unable to get handsets and other accessories in a timely fashion.
Sprint PCS won’t disclose how many customers it converted in the Washington, D.C., market, but some analysts like Lehman Brothers Inc.’s John Bensche believe the carrier lost an estimated 25,000 to 50,000 customers there.
