AT&T, Quest and Verizon, But Not Sprint, to Compete for Big Govt. Contracts

The FCC will issue at least $20 billion (and up to $48b) worth of contracts over the next ten years, under a program called "Networx Universal," for upgrading telecom infrastructure at federal agencies. AT&T, Quest and Verizon were named competitors for the contracts, but Sprint Nextel, historically a major supplier to the government, was not included. Networx Universal calls for upgrades to voice, data, satellite, IP and wireless services at 135 of 184 federal agencies globally. Quest appears to be the biggest beneficiary as the smallest competitor, with an opportunity to also raise its profile. A reason was not provided for Sprint being left off the list, but a former agency official suspects Sprint could not compete on price and as a result, could lose around $200m - $250m annually in its existing business with the government. Sprint will discuss its proposal and the decision with officials next week. The NY Times mentions there will be a second telecom contract award in May -- worth up to $20B, called Networx Enterprise -- which is viewed as less stringent than Universal. Sprint has said it expects to win the Enterprise contract.

Sources: The New York Times, The Wall Street Journal
Commentary: Sprint-Nextel LBO Speculation Resurfaces: Why Now? • Peer to Peer Networking: The Carriers Speak Out • Triple-Play All The Way: A Look at the Hottest Trend in Consumer Telecom
Stocks/ETFs to watch: AT&T (T), Qwest Communications International (Q), Verizon Communications (VZ), Sprint Nextel (S). ETFs: iShares Dow Jones U.S. Telecom Sector Index (IYZ), Telecom HOLDRS (TTH), Vanguard Telecom Services (VOX)

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