Sprint Nextel Telecommunications Services Capstone Project

Excerpt from Capstone Project :

Sprint Nextel Telecommunications

The business environment that is influenced by the process of globalization determines companies to develop flexible strategies in order to be able to ensure their position on the market. The competition in most business fields has increased as a result of companies expanding their activity on international level. The environmental factors that have determined the financial crisis have influenced the purchasing behavior of customers. This is because the incomes of numerous individuals have been reduced as a result f the crisis. This situation has significantly affected most companies. Their revenues have also been reduced.

Therefore, these companies were determined to identify markets able to ensure their necessary of customers, but that could also help them reduce their production costs by outsourcing some of their processes. This is an important factor that requires that companies increase their efforts in the attempt of improving their strategic management skills. These skills are very important in the telecommunications industry. This is because this industry is characterized by a large number of companies that provide differentiated offers. Their differentiation strategy refers to their products or their prices, in accordance with the objectives of each company.

In addition to this, the telecommunications industry requires high level of investments. These requirements are determined by the fact that in order to be successful in this industry companies must invest in technological advancements. This expensive technology is an important objective that telecommunications companies must address.

Sprint Nextel Mission, Vision, and Performance

The company's mission is represented by becoming the leader in providing a simple, instant, enriching, and productive customer experience. The company's mission statement is a simple one and is similar to the mission statements of most companies. However, Sprint Nextel's mission statement reveals an important detail about the company's objectives. This refers to improving customer experience. This means that the company understands that in this business field it is important that companies do not limit to providing high quality innovative products, but to also address customer experience.

This issue can be observed in the mission statements of other competitors in this industry. But Sprint Nextel identifies important factors about improving customer experience that reflects the company's understanding about what customers are interested in. Sprint Nextel understands that customers want products that are efficient, that are productive. In other words, the company understands that customers want to save time and money, that they want products intended to help them simplify their activities, and not complicate them with a series of features that are not necessary and that cost a lot of money.

There are companies that develop products with different features that are not necessary and that complicate customers' activities. Sprint Nextel's customers could find such products as reflecting reduced seriousness from such companies. Therefore, Sprint Nextel positions itself as a serious company that is able to provide improved productivity to serious customers. This can be observed in the sales of the company on different segments of customers in comparison with other telecommunications companies.

Financial Analysis

The following financial information reveals the company's performance:

Consolidated net operating revenues

Net operating revenues in 2012 reached $8,843 in comparison with 2011 when they reached $8,311.

Net operating revenues have increased by 6%.

This significant increase of net operating revenues can be attributed to the fact that wireless services revenues have increased. However, wireline revenues have been reduced, and this is reflected in the company's performance. This revenues improvement was determined mostly by the higher Sprint Nextel platform wireless service revenues.

Operating loss income

The operating loss in 2012 reached $629 in comparison with 2011 when the operating income reached $79.

This situation was determined by several items included in the adjusted OIBDA and by the increase in depreciation expense that can be attributed to the accelerated depreciation that was required by the expected shut down of the Nextel network. In addition to this, the situation can be attributed to the recognition of lease exit expenses of certain lease obligations on different Nextel cell sites. The company's spectrum hosting contract is another factor that influenced this situation.

Adjusted OIBDA

The Adjusted OIBDA in 2012 reached $1,451 in comparison with 2011 when it reached $2,664.

The Adjusted OIBDA has increased by 10%.

This situation was determined by higher postpaid and prepaid wireless service revenues that were influenced by an increase in equipment net subsidy and lower wireline revenues. In addition to this, the Adjusted OIBDA also increased because higher wireless service revenues and lower equipment net subsidy expense associated with fewer handset sales.

Capital expenditures

The company's capital expenditures in 2012 reached $1,158 in comparison with 2011 when they reached $1,958.

The capital expenditures have increased by 81%.

This significant increase of capital expenditures was determined by the high level of investments made by the company in developing its activity. Sprint Nextel invested $704 in Network Vision, and $230 in data capacity (Sprint, 2012). In addition to this, the company also invested in wirelines, corporate activities, and IT infrastructure required by the company's Wireless and Wireline activities.

Net cash provided by operating activities

The company's net cash from operating activities in 2012 reached $1,177 in comparison with 2011 when it reached $2,155.

The net cash provided by operating activities has increased by 9%.

Free cash flow

The company's free cash flow in 2012 reached $209 in comparison with 2011 when it reached $347.

The free cash flow has reduced by 22%.

This financial analysis reveals Sprint Nextel performance that supports its mission and vision.

The information provided in this analysis refers to the second quarter of 2012 in comparison with the second quarter of 2011 and is expressed in millions.

Sprint Nextel Strategic Goals

The requirements of the telecommunications industry have determined Sprint Nextel to identify a series of strategic objectives that its strategy must address. The most important strategic objectives of the company are represented by reducing its IT expenditures, increasing network capacity, virtualization of business applications, cost reduction, and others.

Reducing IT expenditures

In the telecommunications industry IT expenditures represent the greatest part of companies' expenditures. They have the most important weigh in the investments that companies must make. When these IT expenditures reach high levels, this makes it difficult for companies to be able to invest in other activities and process that also require improvements. In other words, increased IT expenditures lead to reduced investments in companies' development.

In order to increase investments in other activities required by the market, Sprint Nextel has identified IT expenditures as an important factor of influence on these investments. The company's strategy relies on business development. This strategy requires large levels of investments (CA Technologies, 2011). However, Sprint Nextel's revenues cannot ensure the necessary amounts of money required by these investments. Therefore, the company must reduce some of its expenditures.

The challenge in this case is to reduce expenditures while ensuring the same level of quality. This is not an easy objective to reach. There are numerous companies in this industry that are not able to reach this objective. This is because the telecommunications industry requires that companies address innovations in the field and technological advancements. These are expensive and it is difficult for companies to use innovation products while reducing costs.

Increasing network capacity

The increase of the company's network capacity is another important success factor regarding Sprint Nextel's strategy. This is because the merger between Sprint and Nextel has diversified the company's activity, the products and services it provides, but it has also increased the number of customers that address the company. Therefore, Sprint Nextel must increase the capacity of its network.

It is important that the company focuses on this objective. This is because this is an important factor that determines the customer satisfaction levels. In other words, Nextel's customers that should address Sprint must be provided similar levels of quality as those provided by Nextel. This is intended to ensure their satisfaction and loyalty.

However, this requires significant investments from the company. It is recommended to develop production facilities that can ensure the necessary required by the company's customers. IT is also important to develop studies intended to identify the needs and preferences of Nextel's customers. This can help the company identify the issues that determine their purchasing behavior and address them.

Virtualization of business applications

This is an important objective that Sprint Nextel must reach in order to improve its position on the market. The virtualization of the company's server estate is intended to significantly reduce costs. However, there are several challenges that must be addressed in order to reach this objective. The most important challenge in this case is represented by correctly estimating the required capacity of these servers. This is useful in identifying the best systems that should be used in the virtualization process.

Another challenge in reaching this objective is represented by ensuring the quality levels of the services provided by the company are reached while maximizing its computing resources. The manual processes initially used by the company were very accurate, but they…

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