Sprint, Nextel move ahead with merger
Just a few days after talks between the two companies were made public, Sprint and Nextel Communications have announced a merger-of-equals agreement to form a combined entity with 35 million customers and valued at $70 billion. As a result of the deal, Sprint plans to spin off its local wireline business.
“I can’t wait to put these companies together. I’m champing at the bit,” said Tim Donahue, president and CEO of Nextel, who will become chairman of the combined entity, to be called Sprint Nextel.
The deal brings together Sprint’s nationwide CDMA network, which is being upgraded to CDMA 1X EV-DO technology and Nextel’s iDEN network, which delivers the market-leading push-to-talk service. The merger also brings together the 2.5 Ghz spectrum properties of both companies, which cover 85% of the U.S., and could be used to support other kinds of broadband wireless services. Additionally, it unites Sprint, the early leader in the MVNO wholesale business, with Nextel, the top provider among corporate niche markets. The combined entity will cover more than 262 million potential customers.
“We concluded that partnering is the best way to add scale and scope,” said Gary Forsee, chairman and CEO of Sprint, who will become president and CEO of the combined company. “We really view this as a second brand. In our MVNO business, we have looked to partner with brands that could take us into markets where we couldn’t go ourselves, and this is the same.”
Forsee said the combined entity will realize more than $12 billion in cost and capital investment synergies derived from several sources, including the decrease of network operating expenses through the reduction in the number of cell sites and switches Sprint Nextel will need; the elimination of future capex by extending Sprint’s EV-DO data capabilities to Nextel customers, and migrating Nextel’s push-to-talk services to CDMA; the transition of Nextel backhaul and other traffic to Sprint’s long-haul infrastructure; integration of back office operations and other moves.
This story was originally published on TelephonyOnline.com.