[December 16, 2004]

Update: Sprint and Nextel Merger Confirmed

I reported yesterday about a rumor hovering around the cellular carrier space. The rumor involved companies Sprint Corp. and Nextel Communications (news). Suspicion arose when industry heads heard about talks of Sprint acquiring Nextel. The rumors have now been confirmed to be a fact�as Sprint and Nextel announced their "merger of equals" late yesterday. Both companies plan to call the newly merged entity Sprint Nextel.

According to the announcement, the deal indeed places Sprint as dominant partner. Both companies have agreed to delay the development of Nextel's iDEN network due to its integration to Sprint's CDMA EV-DO network. This integration plan will start shaping up during the first quarter of 2006 and is expected a completion date of approximately 2008, the companies revealed.

The now partners plan to make their offerings available to cable operators, who will then use the services to fulfill over-hyped multiple-play offerings. The new Sprint Nextel will solely offer wireless products and services, with future plans to enter the VoIP market.

After both companies finalize merger proceedings, current Sprint chairman & CEO Gary Forsee will hold the post of president of the newly formed company Sprint Nextel. This management change places Nextel's president and chief executive officer Timothy Donahue in the chairman spot.

Sprint Nextel�s executive headquarters will set shop in Reston, VA, while operational headquarters will be based in Overland Park, KS. The merger agreement is confirmed at $35 billion stock deal, combining subscribers to a total of 38.5 million.

Newer rumors were expressed at the press conference yesterday. Industry heads believe that Verizon Wireless might be thinking of making a bid to acquire Sprint. So, if this rumor becomes in fact a reality, the wireless powerhouse will only have two caliber-compatible competitors: Cingular Wireless and T-Mobile.