Wednesday, May 24, 2006

Embarq on Better Plans

Embarq spun-off from Sprint-Nextel on Thursday, May 19. Light Reading mag breaks it down:

"Investors holding Sprint stock got one Embarq share for every 20 shares of Sprint they own, thus completing the spinoff. Embarq mainly comprises the former Sprint Local Telecommunications Division and Sprint North Supply groups. The company employs about 20,000 people, and is the fifth largest U.S. carrier, with more than 7 million access lines.... It reached about 777,000 customers with high-speed [DSL] lines as of March 31, and the company expects that will increase by 40 percent in 2006.... the company is trying out citywide WiFi services in Henderson, Nev., in the hope it can find an effective way to compete with its cable rivals in the high-speed data market."

"Sprint Nextel Corp. said Friday subsidiary Sprint Capital Corp. sold about $4.49 billion in senior notes of Embarq Corp," the AP reports. "Embarq shares closed down $1.55, or 3.5 percent, at $42.20 on the New York Stock Exchange. Sprint shares lost 19 cents to close at $22.73."

Embarq is now just a local phone company, stuck with Intra-LATA, LD and DSL -- just like Valor. Cellular and Internet stayed with Sprint. Embarq also got stuck with $3B in debt to counter the $6B in revenues. The company is banking on Florida & North Carolina for growth; it's number 1 and 2 markets, respectively. Embarq will be "joining cable companies in offering packages of services that include local and long distance telephone, high-speed Internet, wireless phone and video." BORING!! Video comes from Echostar (for DISH DBS) and wireless comes from a Sprint MVNO deal. No FTTX deployment plans. Daniel R. Hesse, CEO, has to get creative and fast. Want some ideas, Dan?
  1. Call Hatteras and start rolling out Metro E ... big time!
  2. Look to ISPs to sell your phone lines & DBS service, but let them bill their ISP services on your bill. That is the cheapest way to get a huge sales force selling for you.
  3. Tap into Sprint North Supply to increase hardware sales (through VARs & ISPs)
  4. This is counter culture, but you need a Wholesale Group to start selling to CLECs. CLECs that buy from you provide both revenue and retention (the customer didn't go to cable).
  5. Want more ideas on how to win? Give me a shout!

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