Sprint to Purchase Cox’s 41% Stake in Sprint PCS

Sprint Corp. said it will buy Cox Communications Inc.’s remaining 41% stake in wireless venture Sprint PCS for $1.2 billion in stock, to assume full operational and management control of the Sprint PCS network in three key Western cities.

The transaction, expected to close in the second quarter, is the last step in shifting ownership of Cox Communications PCS to Sprint, the nation’s No. 3 long-distance phone company. Atlanta-based Cox, the nation’s fifth-largest cable TV company, had sold a 20% interest in the PCS venture to Sprint in 1998.

The U.S. cable industry is consolidating as companies try to boost their customer bases to spread the cost of enhancements, such as more channels, interactive TV guides, phone service and high-speed Internet connections. The transaction will allow Cox to concentrate primarily on its cable business.

As part of the agreement, in which Cox will get 24.3 million shares of Sprint PCS Series 2 common stock, Sprint PCS will gain control of wireless operations in the Los Angeles, San Diego and Las Vegas areas.

“I’d look for all the cable players to try to lighten up on [wireless holdings],” said John Bensche, Lehman Bros. Inc. senior wireless analyst. Cox, Comcast Corp. and AT&T; Corp.’s Tele-Communications Inc. all had stakes in the Sprint PCS partnership. Now they want to turn their holdings into cash, he said.

“Our strategy is just to operate cable systems,” said Mark Major, Cox’s director of finance.

Sprint PCS is the nation’s fastest-growing wireless carrier, and the value of its stock has more than doubled since its November 1998 spinoff from Sprint. The company added 763,000 new cellular customers during the first quarter, boosting its total to 3.35 million.

The value of the transaction is based on Sprint PCS’ closing share price Thursday of $48.57. Shares of Sprint PCS closed at $47.69, down 88 cents, while Cox rose $1.25 to close at $73.75, both on the New York Stock Exchange.