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Sprint Nextel Corp. (NYSE: S) first spun off its landline telephone business with the company Embarq years ago, and it will now be joining up with Level 3 Communications, Inc. (NASDAQ: LVLT) to take on the two larger competitors in the long-distance arena. This would pit a joint Sprint-L3 venture in the race with perennial long distance champs AT&T, Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ).With Sprint Nextel losing money and customers quarter after quarter, it obviously needs to do something to help bolster its wireless business. Long distance is a perfect fit for Sprint's nationwide fiber optic network. It's an impressive asset that Sprint doesn't need to sell, but should better utilize unless it seriously wants to just compete on one leg.
Even with Level 3's massive debt and the general slowdown in tech spending within the current recession, this is a good move by Sprint that needs to happen. Although Clearwire has been slower to catch on, Sprint's hope to level the telecom field with the re-formed baby bells (AT&T and Verizon) may be one of its only hopes for long-term survival. It has the network and the resources -- but really needs to take advantage of every single weapon in its arsenal. This possible partnership could be a nice silver bullet.
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