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Nextel Shareholders Approve Merger With Sprint

http://www.cellular-news.com/story/13447.php

NEW YORK -(Dow Jones)- Nextel Communications Inc. (NXTL) shareholders approved its merger with Sprint Corp. (FON) during its annual shareholder meeting Wednesday.

More than 71% of the votes representing common class shares supported the deal. Nextel said that fewer than 1% of the votes were against the merger.

Sprint's acquisition of Nextel will create the nation's third-largest wireless carrier, and give the combined company better footing to compete with larger rivals Verizon Wireless and Cingular Wireless. The deal is expected to close in the third quarter.

"This is one heck of a combination," Nextel Chief Executive Timothy M. Donahue said at the shareholder meeting. "I can't wait to compete against the other large-cap telcos."

The merger combines Sprint's broad consumer appeal with Nextel's corporate clients. It also brings together two different networks, which executives on both sides say will continue to be supported. Sprint uses a form of mobile technology called CDMA, or code division multiple access, while Nextel uses technology called IDEN, best known for its push-to-talk function. Nextel won't leave the IDEN network until at least 2008, and possibly as late as 2010, Donahue said.

The deal, however, could potentially cost the two companies more than the $35 billion price tag. Already Sprint has squashed one lawsuit by acquiring affiliate US Unwired Inc. (UNWR) for $1.3 billion. Another Sprint affiliate, Ubiquitel Inc. (UPCS), has filed a complaint against Sprint and Nextel, as it may be looking to get bought out like US Unwired. The two are among 11 Sprint affiliates - separate companies that use Sprint's wireless spectrum to provide wireless service under the Sprint brand. Both argued the merger violates its exclusivity deal with Sprint.

Nextel Partners Inc. (NXTP), meanwhile, has an option to force Nextel to buy the company out at a premium if the deal goes through. The two parties are in dispute over the level of premium for a potential deal.

Still, a merger was needed after Cingular, jointly owned by SBC Communications Inc. (SBC) and BellSouth Corp.(BLS), acquired AT&T Wireless to surge past Verizon Communications' (VZ) wireless business as the top cellular service provider in the nation.

Donahue believes the merger will help create a potentially nation-leading wireless player.

"I expect to have the best network in the industry," he said. "It'll take some time to get there, but we'll get there."

Sprint recently traded at $25.44, up 12 cents, or 0.5%, on volume of 1.5 million. Average daily volume is 10.5 million.

Nextel recently traded at $32.93, up 13 cents, or 0.4%, on volume of 1.2 million. Average daily volume is 9.7 million.

-By Roger Cheng, Dow Jones Newswires; 201-938-2020; [e-mail]


(END) Dow Jones Newswires