David M. Ewalt, 12.15.04, Forbes.com
NEW YORK - Sprint and Nextel Communications announced a $35 billion
combination today, setting in motion plans that could create a new,
significantly strengthened No. 3 wireless carrier in the United
"This creates three big wireless competitors carrying about 75% of the
traffic," says independent telecom analyst Jeff Kagan. "Three major
carriers can help keep prices low for customers, expenses lower for
the companies and innovation high. The wireless industry needed this
wave of consolidation."
The new company -- to be called Sprint Nextel -- will boast a
particularly strong base of corporate customers, and a total
subscriber base of around 40 million customers. That will put it close
behind No. 1 Cingular Wireless -- a joint venture between SBC
Communications and BellSouth -- and No. 2 Verizon Wireless -- a joint
venture of Verizon Communications and Vodafone Group.
Under the terms of the deal, existing Sprint shares will remain
outstanding, and each Nextel common share will be converted into new
company shares and a small per-share amount of cash. The exact
stock/cash allocation will be determined when the deal closes, but at
current values, Nextel shareholders would receive about 1.28 Sprint
Nextel shares and about 50 cents in cash for each share. The aggregate
amount of the cash payment will not exceed $2.8 billion.