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Sprint Sticks With Nextel's Network

The telco quiets speculation that it will unload the faltering walkie-talkie business.

Sprint

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affirmed its commitment to the Nextel walkie-talkie network, quieting speculation that the company was moving away from the effort.

After two years of customer defections and deteriorating service on Nextel's iDEN network, Sprint's new chief Dan Hesse said he plans to better integrate the separate mobile phone system.

The recommitment comes amid concerns that Sprint was considering

spinning off its iDEN network to public safety agencies.

"The Nextel National Network is key to delivering Nextel Direct Connect," Hesse said in a press release. "Customers can expect to see continued investment and the introduction of new handsets to utilize the network's unique capabilities," he continued.

The failure to keep once-loyal Nextel customers happy became one of the hallmarks of former CEO Gary Forsee's term. Sprint's eroding subscriber base and repeat earnings shortfalls was directly tied to the dissatisfaction and departure of Nextel customers after the companies' 2005 merger.

Nextel's two-way radio function became a big differentiator among wireless services and a valued tool among work teams and other in-the-field customers who prized its direct connections.

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But service and support suffered and customers grumbled. Some analysts point to Sprint's neglect of the iDEN network as the key reason the company got

shut out of a massive federal contracting opportunity.

Sprint says it will roll out new hybrid phones that work with iDEN and Sprint's broadband networks so users can take advantage of services like instant messaging, and picture sharing.

Investors didn't exactly applaud the renewed commitment to a bifurcated network. Shares of the telco recently were down 3.7% to $10.40.

Some investors had hoped Sprint could unwind itself from the failed Nextel merger by selling the operation.

Hesse is conducting a sweeping review of Sprint's strategy and is expected to announce his plan sometime in April.

The new chief has already announced deep cuts, including a management shakeup. On Tuesday, Sprint was reported to have revived talks around a joint WiMax venture with

Clearwire

(CLWR)

. That move would help shift WiMax to another operator, giving Sprint a chance to focus on its core wireless and business services approach, say observers.