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Sprint and Nextel merger agreed
Posted on 16-Dec-2004 07:50 | Tags Filed under: News



Sprint and Nextel Communications, Inc. have agreed to merge to form Sprint Nextel, also intends to spin off Sprintís local telecommunications business following the merger. This includeds consumer, business and wholesale operations from its other businesses and then spin this separated company off to the Sprint Nextel shareholders in a transaction that is expected to be tax free.


Sprint and Nextel currently have a combined total equity value of approximately $70 billion and serve more than 35 million wireless subscribers on their networks and 5 million additional subscribers through affiliates and partners. The two companies, along with their affiliates and partners, operate networks that directly cover nearly 262 million people in the United States.

The company says that Sprint Nextel is expected to have the highest average revenue per user (ARPU) in the wireless industry, while total pro forma revenues for the four quarters ended September 30 for Sprint Nextel were approximately US$40 billion, which includes approximately US$6 billion in revenues generated by the local telecommunications business, which the company plans to spin off following the merger.

Sprint and Nextel are being valued equally in the merger and their shareholders will each own approximately 50 percent of the new company after the merger. 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, with a total value equal to 1.3 shares of Sprint Nextel common stock. The exact stock/cash allocation will be determined at closing of the merger in order to facilitate the spin-off of the local telecommunications business on a tax-free basis. The aggregate amount of the cash payment will not exceed $2.8 billion. If the stock/cash allocation was calculated today, it is estimated that Nextel shareholders would receive about 1.28 Sprint Nextel shares and about $0.50 in cash for each Nextel share.

Sprint Nextel will have its executive headquarters in Reston, Va., and its operational headquarters in Overland Park, Kan. The new companyís common stock will be listed on the New York Stock Exchange. The merger is expected to close in the second half of 2005 and is subject to shareholder and regulatory approvals, as well as other customary closing conditions.

The new company plans on saving network operating expenses by reducing the number of cell sites and switches and reducing overall capital expenditures by extending Sprintís current deployment of next-generation EV-DO technology to the combined customer base, including migration of Nextelís push to talk services to CDMA.

Sprint Nextel will have to work to combine mixed wireless network capabilities, including Nextelís current nationwide 800MHz/iDEN network, Sprintís national 1.9GHz/CDMA network and Sprintís nationwide deployment of wireless EV-DO.

Sprint Nextelís plans include migrating over time Nextel services, including push to talk service, to Sprintís CDMA EV-DO network. Sprint Nextel will have the capability to deploy new services on the two companiesí 2.5GHz combined spectrum.






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