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Sprint and Nextel announce merger
Telecoms.com News
15 December 2004
James Middleton, [e-mail]

http://www.telecoms.com/NASApp/cs/ContentServer?pagename=marlin/home&siteid=30000000461&mp_c....

Sprint and Nextel Communications today announced a definitive agreement to merge, creating the country's third largest wireless operator in a deal estimated to be worth US$35 billion. With around 35 million subscribers and 5 million additional subscribers through affiliates, the merged company, Sprint Nextel, will trail close behind Verizon Wireless with around 42 million customers and recently merged Cingular Wireless/AT&T Wireless with 47 million subscribers.

The new company, which will have a combined total equity value of approximately US$70 billion, will be owned 50/50 by Sprint and Nextel shareholders respectively. Existing Sprint shares will remain outstanding, while each Nextel share will be converted into new company shares plus a cash amount per share. The merger is expected to close in 2H05 and the company also intends to spin off Sprint's fixed-line business following the merger.

The new company will be headed up by Gary Forsee, currently chairman and CEO of Sprint, who will become president and CEO of Sprint Nextel, with Timothy Donahue, president and CEO of Nextel, becoming chairman of the new company.

The merged company is expected to deliver operating cost and capital investment synergies with an estimated net present value of more than US$12 billion through a reduction in the number of cell sites and switches, and an extension of Sprint's deployment of EV-DO to the combined customer base, including migration of Nextel's services to CDMA. The move answers questions raised earlier this week by confirming Nextel's abandonment of FLASH-OFDM trials.

Following the merger, the new company will benefit from Nextel's nationwide 800MHz/iDEN network and Sprint's national 1.9GHz/CDMA network, with Nextel services, including push to talk to be migrated to EV-DO, reportedly in 2006. Sprint Nextel will also have the capability to deploy services on the two companies' 2.5GHz combined spectrum holdings that together cover 85% of households in the top 100 markets.