Sprint Nextel Corporation (S) Running Out of Options?

Sprint Nextel CorporationSprint Nextel Corporation (NYSE:S), the third-largest wireless carrier in the U.S. with a little more than 56 million subscribers, was on the sidelines while some consolidation happened this week – which seems to go counter to what CEO Dan Hesse said in a earlier interview, where he said that his company would be actively involved in industry consolidation – as T-Mobile USA agreed to merge with MetroPCS, which was considered a top acquisition target for Sprint Nextel Corporation (S).

In the wake of the impending purchase – which still must go through regulatory channels with the FCC – T-Mobile USA would grow its subscriber base to nearly 33 million to make it the solid No. 4 carrier in the country and would eliminate a takeover option for Sprint Nextel Corporation (NYSE:S). So while Sprint Nextel Corporation (S) is half the size of market leaders Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T), T-Mobile USA is catching up to gain some strength in the marketplace.

So what are the options left for Sprint Nextel Corporation (NYSE:S) to move itself forward in gathering more market share? “It certainly pushes them into a corner,” said Tom Burnett of research firm Wall Street Access. “You can’t be an orphan in this industry. You’ve got to try and save a place at the table, and there’s going to be some movement here.”

The good news is twofold for Sprint Nextel Corporation (NYSE:S). First, the stock has risen more than 109 percent this year, which outpaces the world telecommunications index, and second is that the stock is still trading at a 58 percent discount to sales over the last year, while the 47-stock telecom index has been trading at a 17 percent premium – which seems to mean, the stock has been up and yet is still a value. But where can Sprint Nextel Corporation (S) go? Some options left include buying Leap Wireless International Inc. (NASDAQ:LEAP), paying more to possibly merge with an upgraded T-Mobile USA, or perhaps buying spectrum from Dish Network Corp. (NASDAQ:DISH) or even Verizon Communications Inc. (NYSE:VZ).

In the wake of this T-Mobile/MetroPCS merger, what do you think is/are the best options left for Sprint Nextel Corporation (NYSE:S)? Can it still compete in the marketplace if it does nothing, and if not, what move do you think would be best for the company and for investors like billionaire fund manager David Einhorn of Greenlight Capital?