Report: PE Firms Circle Sprint’s Nextel Unit

NEW YORK (Reuters) – Sprint Nextel Corp (S.N), which has been considering a sale of its Nextel unit, has received interest from Latin American service provider NII Holdings Inc (NIHD.O) and private equity firms, according to a report on the Wall Street Journal website.

But the story, which cited unnamed people familiar with the situation, said that factors complicating any deal include the cost of separating the network unit and a “large amount of debt Sprint wants to unload on the buyer.”

As well as NII, which uses the same network technology as Nextel, private-equity firm Cerberus Capital Management LP is also considering a purchase of the unit and there may be more bidders as well, the story said, citing unnamed people.

One source familiar with the situation also told Reuters that private equity companies were looking at Nextel.

Representatives for Sprint and Cerberus declined to comment on the story. NII representatives were not immediately available for comment.

The Journal said that a group, including Providence Equity Partners Inc and Madison Dearborn Partners, showed interest earlier in the process but were not expected to be in the latest round of bidding.

It said that the company, which has held talks with a range of prospective buyers in recent months, was within days of receiving a second round of bids.

Sprint, the No. 3 U.S. mobile service, has been struggling to stem customer losses. It said in August it was considering a sale of the Nextel network it had bought in 2005 for $35 billion but which was estimated by analysts to be worth about $5 billion in August.

In September Sprint Chief Executive Dan Hesse shrugged off market concerns that it was having trouble selling the network based on iDen technology.

He told analysts at a conference that it would consider an offer that was compelling and delevering but that if it did not receive an attractive offer it would hold on to the asset.

In the last three years Sprint has worked on integrating the Nextel network with its own network. (Reporting by Sinead Carew, Ritsuko Ando and Megan Davies; Editing by Phil Berlowitz)