Sprint and Nextel Communications, Inc. have just announced a definitive agreement for a merger.
The new company, which will be called Sprint Nextel, will serve more than 35 million wireless subscribers on its networks and 5 million additional subscribers through affiliates and partners.
These companies offer a variety of smartphones and wireless handhelds, including models from palmOne, RIM, Audiovox, and Samsung.
One of the biggest difficulties of this merger will be the fact that these two companies use incompatible wireless networking standards; Sprint uses CDMA, while Nextel uses iDEN. A statement from the company indicates that Nextel’s iDen network will be phased out. However, this doesn’t mean that Nextel’s popular “push to talk” service will go away; instead, it will be implemented on the new company’s CDMA network. Current customers of both companies will have the option of upgrading to Sprint’s high-speed EV-DO network.
Sprint and Nextel are being valued equally in the merger and their shareholders will each own approximately 50 percent of the new company after the merger. Existing Sprint shares will remain outstanding and each Nextel common share will be converted into new company shares and a small per share amount of cash, with a total value equal to 1.3 shares of Sprint Nextel common stock. The exact stock/cash allocation will be determined at closing of the merger.
Sprint Nextel intends to spin off to its shareholders Sprint’s local telecommunications business following the merger.