Sprint, Nextel Said to Be in Talks
Sprint Corp., the No. 3 U.S. mobile phone company, and Nextel Communications Inc. are in talks about a possible merger, people familiar with the matter said Thursday.
A merger would combine Sprint with the fifth-largest U.S. mobile phone company and create a provider with a market value of about $70 billion.
Pressure on mobile phone companies to increase in size has grown since Cingular became Cingular Wireless in October through the purchase of AT&T; Wireless Services for $41.3 billion, becoming the biggest provider ahead of Verizon Wireless.
If Sprint Chief Executive Gary Forsee and Nextel CEO Tim Donahue combine their companies it would be a bigger No. 3 provider, with 33 million subscribers.
Financial television network CNBC and the Wall Street Journal had reported the talks earlier. Spokesmen for Nextel and Sprint declined to comment.
The talks are in an early stage, the sources said.
Shares of Sprint rose $1.78, or 7.9%, to $24.28 on the New York Stock Exchange. Nextel, the largest provider of push-to-talk mobile telephones, gained $1.84, or 6.6%, to $29.81 on Nasdaq.
Cingular is a joint venture of SBC Communications Inc. and BellSouth Corp. SBC shares fell 24 cents to $25.02 and BellSouth eased 40 cents to $27.90, both on the NYSE.
Verizon Wireless is owned by Verizon Communications Inc. and Vodafone Group, which fell 15 cents to $41.20 and 49 cents to $27.59, respectively, on the NYSE.
Nextel has 15.3 million subscribers; Sprint has 17.3 million.
By contrast, Cingular has more than 47 million subscribers and Verizon has more than 42 million.
Overland Park, Kan.-based Sprint would gain access to Nextel’s business customers, who pay higher monthly bills and are more loyal than customers of any other national wireless carrier. Nextel’s average monthly bill was $69 and its monthly rate of customer turnover was 1.5% in the third quarter, compared with Sprint’s $63 in average monthly bills and churn of 2.7%.
Sprint’s network would give Reston, Va.-based Nextel a head start in upgrading its airwaves to high-speed technology.
