Nextel Embraces Underdog Role

CFO Paul Saleh sees the wireless edge winning out even as Verizon and SBC bulk up.
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Nextel (NXTL) is casting itself as the anti-Bell as consolidation reshapes the telecom industry.

This month's pairings of phone titans

SBC Communications

(SBC)

with

AT&T

(T) - Get Report

and

Verizon

(VZ) - Get Report

with

MCI

(MCIP)

are giving Nextel an edge of sorts, CFO Paul Saleh said in an interview Thursday.

Nextel and

Sprint

, of course, kicked off the dealmaking craze with December's $30 billion merger of equals.

Saleh, who will take the chief financial job with Sprint Nextel when the deal closes, fancies his company as the underdog to the big Bells.

"They are trying to build a presence in the enterprise market," says Saleh, referring to SBC and Verizon's bid to enter the coveted top tier of business services by acquiring the No. 1 and No. 2 players, AT&T and MCI.

He adds that Nextel and Sprint have an advantage because more and more money is being spent on wireless services, as opposed to calls on old wired networks. "We are focused on being a competitor to all these

Bells with wireless replacement, and offering seamless mobility," Saleh says.

Nextel shares were down 28 cents, or 1%, to $28.90 after the company

posted solid fourth-quarter numbers but guided for lower profits next year due to tax charges.

Nextel, after all, has had some success turning small differences into big advantages. The Reston, Va., wireless shop took its walkie-talkie technology and business market niche and ran away with top honors in its class last year for profits, revenue per user and customer loyalty.

But sustaining that success became a growing concern among investors. Nagging issues like the hefty price tag attached to massive network upgrades started to cloud Nextel's otherwise bright prospects.

The merger with Sprint is by some accounts a well-timed opportunity to build its wireless business while solving its tech problem. Nextel and Sprint are planning interoperable devices that work with a new broadband wireless network.

To Saleh, the Nextel-Sprint merger is an even bigger bet on wireless.

"The bet is proving right so far," says Saleh, who points to the 26% of total telecom spending that currently goes to wireless service. Saleh sees wireless gaining a bigger slice of that pie.

"We are excited," says Saleh, who sees the merger on track for approval late this year. "We will be the dominant wireless player."