Sprint, Nextel close merger deal

Sprint and Nextel Communications on Friday formally closed the merger they announced last Dec. 15, forming a mobile telecommunications behemoth called Sprint Nextel.

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The new company, with about 44 million subscribers, will have its corporate headquarters in Nextel's home of Reston, Via., and its operational base in Overland Park, Kan., which was Sprint's home base. Shares in Sprint Nextel, with the ticker symbol S, will begin trading Monday on the New York Stock Exchange, the company said in a statement Friday.

The "merger of equals" was the second big deal in the consolidation of the U.S. mobile market over the past two years. Cingular Wireless LLC's acquisition of AT&T Wireless Services closed last October. There are now four major national mobile operators, led in subscriber numbers by Cingular, which claims more than 50 million subscribers, followed by Verizon Wireless with 45.5 million, according to its Web site. Sprint Nextel is third largest. The only other major national provider, T-Mobile USA, has about 18.2 million subscribers and has been seen by some as a potential takeover target.

Meanwhile, mobile takeover fever has been matched in the wired world, with SBC Communications'' purchase of AT&T, announced in January, and the bidding war for MCI, which Verizon appears to have won. SBC's deal is expected to close in the first quarter of next year, and Verizon's perhaps in the first half.

Sprint Nextel will use the Sprint corporate brand, but there will be a line of Nextel products sold in Sprint stores. The company initially will operate two different types of wireless networks, Sprint's CDMA (Code Division Multiple Access) infrastructure and Nextel's iDEN (Integrated Digital Enhanced Network) system. The combined company will continue to invest in and expand its iDEN network through 2007 and is looking at opportunities to market it to governments and public safety organizations, a Nextel executive said last December.

Nextel pioneered instant "push-to-talk" services, which became a big hit with businesses and government agencies and are now offered by many other mobile operators using different technologies. Nextel has a loyal and lucrative customer base of small enterprises and blue-collar business units, as well as a youth-oriented service called Boost Mobile, while Sprint brings consumer and large enterprise accounts.

Sprint Nextel has the highest average revenue per user in the industry, according to the company's Friday statement. Its networks cover about 268 million people, the company said. The company also includes Sprint's global Internet backbone. In addition, the combined company holds most of the licenses in the U.S. for a radio band around 2.5GHz that it is expected to use for wireless broadband services.

Former Sprint Chief Executive Officer (CEO) Gary Forsee is CEO and president of the combined company, and Tim Donahue, formerly CEO at Nextel, is Sprint Nextel's executive chairman.

Sprint Nextel has begun the process of spinning off Sprint's local telephone services and expects to complete the transaction next year, the company said. The business will be the largest independent local phone company in the country, with about 7.5 million access lines in 18 states, according to the company. It will be based in the Kansas City area and is expected to be listed on the New York Stock Exchange, the company said.