Qwest Leaves Sprint for Verizon Wireless
05/05/08 - 05:18 PM EDT
Robert Holmes
Voice- and data-services provider Qwest Communications (Q Quote - Cramer on Q - Stock Picks) is deserting Sprint Nextel (S Quote - Cramer on S - Stock Picks) to partner with rival Verizon (VZ Quote - Cramer on VZ - Stock Picks) for its wireless presence.
Qwest said late Monday it has signed a five-year agreement to market and sell Verizon Wireless service beginning this summer. Verizon Wireless is the joint venture between Vodafone (VOD Quote - Cramer on VOD - Stock Picks) and Verizon. Financial terms of the agreement were not disclosed. Shares of Qwest fell nearly 1% during Monday's regular session but recovered those losses in late trading. Under the agreement, Qwest customers will have access to the full-line of Verizon Wireless handsets and smartphones, including Research In Motion's (RIMM Quote - Cramer on RIMM - Stock Picks) Blackberry devices. Under its existing deal with Sprint, Qwest was responsible for supplying its customers with handsets. Qwest's contract with Sprint is set to expire in February 2009. Qwest subscribers can also receive high-speed broadband wireless from Verizon Wireless. Residential customers will be billed directly by Verizon Wireless or be allowed to bundle those services with Qwest's triple-play package for home phone, Internet and video. "We are excited to be partnering with Verizon Wireless and believe this opportunity will enhance the Qwest customer experience," said Qwest CEO Ed Mueller. "Qwest's strategies for success certainly will benefit from this deal and we look forward to a solid relationship with Verizon Wireless." In February, Mueller complained that Qwest had a "hole in wireless" during an analyst meeting, a clear sign of his displeasure over its partnership to resell Sprint's services. Qwest, which has reported diminished sales results as traditional phone lines have faded, is hoping a new partnership with Verizon Wireless will fulfill its need for a foothold in the wireless arena.
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