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Nextel and Sprint Merge

Discussion in 'Channel Zero' started by fatalist, Dec 15, 2004.

  1. fatalist

    fatalist Dirty Dozen Crew

    Joined: Mar 10, 2004 Messages: 6,354 Likes Received: 25
    Sprint, Nextel in $35B merger

    Wireless company will have about 35 million customers, making it No. 3 in the country.
    December 15, 2004: 8:39 AM EST

    NEW YORK (CNN/Money) - Sprint and Nextel announced plans for a $35 billion merger Wednesday, creating a new major wireless phone power with a customer base to challenge its two larger rivals.

    The companies called the deal a merger of equals, saying shareholders will each own about 50 percent of the new company, which will be called Sprint Nextel. Existing Sprint (Research) shares will remain outstanding and each Nextel (Research) common share will be converted into about 1.28 shares in the new company, as well as 50 cents cash.

    Using those exchange ratios, the deal represents no premium for Sprint shareholders, who will retain the shares they hold, and about a 9 percent premium for Nextel shareholders, based on Tuesday's closing prices. Shares of Nextel gained 50 cents to $30.49 in pre-market trading on INET Wednesday, while Sprint edged up 5 cents to $25.15 on INET.

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    "It's a great deal for Sprint. They didn't pay much of a premium for Nextel. I'm not sure how they pulled that off," said Greg Gorbatenko, telecom analyst for Marquis Investment Research.

    But Gorbatenko said the two companies are not the best of fits with each other, with very different customer bases and business models.

    "Going forward, we believe that Sprint will have its hands full. The merger is not a puzzle piece fit," he said. "Nextel users may feel a little jilted since the cult-like following is now mass market, losing the push-to-talk (walkie talkie) focus. We will have to be compelled by the new strategy and integration to maintain our current "buy" rating on the Sprint stock."

    The companies did not give a value of the deal, but using the expected exchange ratio and the Nextel shares outstanding puts the cost to Sprint at about $35 billion. The companies say the value of the combined company is expected to be $70 billion.

    The companies also say that Sprint's local phone operations will be spun off to shareholders of the new company in a tax-free transaction.

    Sprint was already the third largest wireless phone company before the deal, but it was a distant third with only about 20.1 million customers, compared to more than 40 million for each of the two largest providers, Verizon Wireless and Cingular.

    Nextel, with 15.3 million customers, was fifth behind T-Mobile. Sprint and Nextel say they have another 5 million additional subscribers through affiliates and partners, giving the combined company close to 40 million customers.

    The companies say their customers are worth more than competitors' subscribers, with the highest average revenue per user. That is greatly due to Nextel, which has been a pioneer in the walkie-talkie service on cell phones. Gorbatenko said Sprint's revenue per customer is about $61 a month, just above the industry average, while Nextel's average revenue comes to about $71 a month.

    Sprint Chairman and CEO Gary Forsee will be president and CEO of the combined company. Nextel CEO and President Timothy Donahue will be chairman of Sprint Nextel. The company's 12-member board will have six from each company.

    The deal is expected to close in the second half of next year. It is expected to produce operating cost and capital investment savings with a current value of $12 billion, according to the companies.



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    Those savings include reducing the number of cell sites and switches, reduced combined sales and marketing costs as well as administrative expense. It did not give any estimate for reduction in staff.

    This is the second major, and second largest, deal in the wireless phone sector this year. In August, Cingular Wireless, a joint venture of SBC (Research) and BellSouth (Research), completed its $41 billion acquisition of AT&T Wireless, a deal that made it the largest wireless provider with 46 million customers.

    No. 2 Verizon Wireless, a joint venture between Verizon Communications (Research) and Vodafone Group (Research), has about 42 million customers. There were reports Tuesday that Verizon was weighing its own bid for Sprint, but Vodafone came out with a statement saying it would not be involved in such an offer.

    The Wall Street Journal reported early Wednesday that the deal between Sprint and Nextel would include a $1 billion break-up fee to be paid by any other suitor who stops the deal from taking place.

    .......that's pretty shitty when 2 companys that have been around forever merge, and are still only NUMBER 3
  2. GucciCondom

    GucciCondom Veteran Member

    Joined: Jul 29, 2003 Messages: 5,558 Likes Received: 168
    So does this mean that Nextel won't be such a shitty service anymore?

    I'm waiting for Verizon to get into the walkie-talkie game before I jump on the Nextel bandwagon and have niggas callin me coppin the 'please hold while the nextel subscriber you are trying to reach is located" every time.
  3. rental

    rental Dirty Dozen Crew

    Joined: Jul 1, 2001 Messages: 7,641 Likes Received: 2
    i think at&t merged with cingular too.
  4. Overtime

    Overtime Dirty Dozen Crew

    Joined: Apr 22, 2003 Messages: 13,989 Likes Received: 313
    hahha, yeah, i think sprint is shitty, but i have verizon so nothing is affecting me yet...non one mergin or buy my company....
  5. fatalist

    fatalist Dirty Dozen Crew

    Joined: Mar 10, 2004 Messages: 6,354 Likes Received: 25
  6. alcohol swab

    alcohol swab Member

    Joined: Oct 10, 2004 Messages: 935 Likes Received: 3
    tmoblie sucks.fuck them.they said i owed $65 dollars for text messaging when i never even used it
  7. GucciCondom

    GucciCondom Veteran Member

    Joined: Jul 29, 2003 Messages: 5,558 Likes Received: 168
    Yeah these companies are shady, somehow for 2 months in a row I went over my minutes and had a $300 phone bill. I fucking use my phone just the same every month before that and after that and never got it in the past or since then.

    Somewhere I read that people could like get viruses into your phone from downloading shit to them and leach off your service.
  8. fatalist

    fatalist Dirty Dozen Crew

    Joined: Mar 10, 2004 Messages: 6,354 Likes Received: 25

  9. WitE TrAsH

    WitE TrAsH Member

    Joined: May 1, 2004 Messages: 416 Likes Received: 1
    This is the summary of Nextel right here, shit....
  10. GLIK$

    GLIK$ Dirty Dozen Crew

    Joined: Jul 23, 2002 Messages: 22,277 Likes Received: 117
    I heard that if youre a current Nextel subscriber that you now need to purchase a new phone after this.

    Is this fucking correct?

    If so, Im flipping shit thanks to just purchasing a $300+ phone.
  11. villain

    villain Veteran Member

    Joined: Jul 12, 2002 Messages: 5,190 Likes Received: 2
    Oh yeah more cell phones means more phone phreaking. You could always encrypt your shit. I'm checking out these VoIP services before they get burned at the stake.
  12. GLIK$

    GLIK$ Dirty Dozen Crew

    Joined: Jul 23, 2002 Messages: 22,277 Likes Received: 117
    ...and all the bad Nextel service?

    I dont know where you live but in the entire NYC area and including all of southern Westchester I get perfect service.

    Even when going upstate Im fine.
  13. GucciCondom

    GucciCondom Veteran Member

    Joined: Jul 29, 2003 Messages: 5,558 Likes Received: 168
    I don't know, I'm from around Philly and I know atleast 15 people that have a Nextel and atleast 3 out of 5 times I try to call them I get the dreaded message.

    Maybe PA doesn't have enough towers or something?

    What pisses me off is that everyone complains about their Nextel but people continue to get them just to be cool.
  14. SteveAustin

    SteveAustin Veteran Member

    Joined: Mar 12, 2002 Messages: 7,042 Likes Received: 2
    thats completely fucked if thats the case.
    I just wanna know when I can get walkie talkie service on my sprint phone.
    I'm not gonna hold my breath though...I'm gonna go on ahead and get a new phone in the next couple of weeks.
  15. SteveAustin

    SteveAustin Veteran Member

    Joined: Mar 12, 2002 Messages: 7,042 Likes Received: 2
    oh yeah...I've never really had any problems with Sprint.
    maybe an occasional black hole close to the hood.