Sprint Spin-off Embarq to Offer Wireless Bundle through MVNO Alliance
By Robert Liu
TMCnet Executive Editor
Embarq (News - Alert), the incumbent local exchange carrier (ILEC) recently spun-off from Sprint (News - Alert) Nextel that considers itself a “brand new, 107-year-old company,” will offer wireless bundled service plans through a Mobile Virtual Network Operator (MVNO) relationship with its former parent company.
An announcement will be made early next week at the annual GlobalComm (News - Alert) trade show, which kicks off June 4-8, in
According to the S-1 filing, the company will provide CDMA-based wireless voice and data
“We believe Embarq’s profile resembles characteristics of both a regional Bell operating company and a rural local exchange carrier with approximately 50/50 mix of its access lines between urban and rural markets,” Jonathan Atkin, analyst at RBC Capital Markets, wrote recently in a research report.
Embarq become a separate, publicly traded company on May 18, when Sprint Nextel completed its previously disclosed plans to spin off its local phone business following the completion of the Sprint’s acquisition of Nextel. But despite being the New Kid on the Block, Embarq is actually the fifth-largest (based on access lines) local communications company in the U.S., serving about 4.5 percent of U.S. households with approximately 7.4 million consumer and business access lines.
But while the company gets its product portfolio in order, other analysts believe the biggest hurdle for Embarq executives is likely to be successfully transitioning to a new corporate culture that is essential for survival in the highly competitive marketplace.
“It looks like the company is well positioned for the new wave of competition we will see over the next few years,” said Jeff Kagan, industry analyst. “The only question is whether the employees are ready. This is not a company that has competed for business in the past so they have to think and act differently going forward. The senior executive team sure gets it, but that new focus has to be translated down throughout the organization.”
The initial seven-year term gives Embarq the right to resell the wireless bundled
Like with most MVNO relationships, the wireless service will be branded as “Embarq” using its trademarks and logos, essentially competing with Sprint Nextel in the consumer and SMB market. Small business customers for purposes of the MVNO relationship are defined as businesses with less than 80 lines of wireless
“By offering a bundled package of products and
Following the initial seven-year term, the MVNO agreement may be renewed for successive one-year periods until one party gives notice to the other party of its intent not to renew the agreement. Each company will have the right to terminate the agreement upon a material breach of the agreement by the other party, if the breach is not cured within a certain period of time. Sprint Nextel also will have the right to terminate the agreement if Embarq fail to meet subscriber targets within the first two years of the agreement, or if Embarq transfers more than 50 percent of its subscribers to another carrier. Sprint Nextel will have the right to terminate the MVNO agreement upon a change of control at Embarq. There are certain restrictions that will prevent Embarq from transferring its base of wireless customers to another carrier.
Robert Liu is Executive Editor at TMCnet. Previously, he was Executive Editor at Jupitermedia and has also written for CNN, A&E, Dow Jones and Bloomberg. For more articles, please visit Robert Liu's columnist page.
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