A little-noticed news item recently came to light that should probably be raising some eyebrows. Yet another acquisition has recently been proposed by Sprint Nextel, the corporation that came together from the marriage of two former companies whose networks to this day remain incompatible, and will continue to be so until at least 2010.
So who is the acquisition target this time? Velocita Wireless, a small wireless data company based in Woodbridge, NJ that was formerly known as Cingular Interactive. Cingular’s reasons for spinning off the company were clear: they run a very old, slow and dead-end cellular data network known as Mobitex that used to power the Palm VII as well as the first-generation Blackberry devices (and surprisingly, continues to serve the remaining 400,000 or so of that first wave that still survive). And now, the New Sprint seems to think that purchasing a third incompatible network is a smart thing to do.
To be sure, the merger announcement indicates that Sprint’s real reason for acquiring Velocita is to “utilize a portion of Velocita’s spectrum assets to supplement Sprint Nextel’s coverage for customers on its iDEN® national network.” However, in the same paragraph, Sprint makes an open-ended committment to continue serving the existing customers on the old Mobitex network.
So if this deal closes, Sprint will then have the infrastructures of three former companies to maintain, and a smattering of wireless frequencies in disparate, non-contiguous areas. And through it all, no definitive plan for consolidation. Maybe it’s just me, but isn’t synergy supposed to be an important ingredient in mergers and acuisitions?