Sprint Nextel to Acquire Virgin Mobile To Expand Its Prepaid Business

July 28, 2009

(ChattahBox) — Sprint Nextel Corp. has made a strategic move into the fast-growing prepaid market, with plans to purchase Virgin Mobile USA in a share transaction that values the cellphone provider at $483m. The deal values Virgin Mobile at $5.50 a share, a 31% premium to Monday’s closing price. Sprint the No. 3 U.S. mobile service already owns 13% of Virgin Mobile. In the deal expected to close in the fourth quarter of 2009 or in early 2010. Sprint also agreed to eliminate all of Virgin Mobile USA’s outstanding debt, of about $205 million net of cash and cash equivalents by September 30.

Sprint will bring the Virgin Mobile executive team directly under corporate control with current CEO Dan Schulman who will now manage Sprint’s entire prepaid operation, including Boost, reporting directly to CEO Dan Hesse and Boost CEO Matt Carter reporting to Schulman. With the purchase, Virgin will also eliminate the cost of buying Sprint airtime on a wholesale basis at a time of hyper competitiveness in prepaid airtime rates to consumers.  Sprint also hopes the transaction will “enhances cross-selling of a full suite of Sprint products and services across a larger target audience.”



Got something to say? **Please Note** - Comments may be edited for clarity or obscenity, and all comments are published at the discretion of ChattahBox.com - Comments are the opinions of the individuals leaving them, and not of ChattahBox.com or its partners. - Please do not spam or submit comments that use copyright materials, hearsay or are based on reports where the supposed fact or quote is not a matter of public knowledge are also not permitted.