Sprint Nextel to Acquire Virgin Mobile for $483 million

It looks like like two known wireless network operators will merge to form a larger entity. After acquiring Nextel, Sprint has made a deal to merge with Virgin Mobile.

Sprint has proudly announced that its boards of directors have approved a definitive agreement to acquire Virgin Mobile USA for a total equity value of approximately $483 million. This means that the wireless network operator will assume control of Virgin and its 5.2 million customers.

So is this the end of Virgin Mobile? Well, no. Sprint says that Virgin Mobile will be maintained as a separate brand and offered along side its Boost Mobile pre-paid service. So the bitter rivals in the prepaid service market will now serve one master.

The CEO of Virgin Mobile USA will continue to run the Virgin Mobile division, and will report directly to Sprint CEO Dan Hesse.

But why did Sprint decide to acquire Virgin Mobile? Here are the reasons that the company revealed on its Sprint Nextel-Virgin Mobile merger announcement:

• Strengthens Sprint’s position in the fast growing prepaid segment.
• Enhances cross selling of full suite of Sprint products and services across a larger target audience.
• Free cash flow accretive for Sprint before synergies.
• Synergies to be derived from general and administrative reductions, operational efficiencies, and streamlined distribution.
• Sprint gains deeper managerial talent with additional expertise in the prepaid segment

The Sprint Nextel-Virgin Mobile merger is expected to close in late 2009 or early 2010.

Well, this development is certainly interesting. I thought that Sprint was on its way down but this move seems to breath new life to the company. Verizon Wireless also recently acquired Alltel so perhaps AT&T and T-Mobile will also make a move.

That's it for this news on the Sprint Nextel-Virgin Mobile merger. Tune in to this blog for the latest news and updates on wireless network operators.