Cell phone companies Sprint and Nextel have
agreed to merge, the companies announced today.
Sprint’s digital PCS network focuses on areas
around the national interstate system and is used by a number of truckers.
Nextel is known for its walkie-talkie service, which is heavily used by small
The new combined company will be called Sprint
Nextel. It will “spin off” Sprints local wireline business, which provides
regular phone service in many smaller markets and is one of the largest
independent traditional phone companies in the nation, with 7.7 million
customers in 18 states.
After the merger, the new company will be the
third largest cell phone provider in the United States after Cingular and
Verizon. It will have roughly 40 million customers and offer service in all 50
states, Puerto Rico and the U.S. Virgin Islands.
Whether the merger will effect the prices cell
phone users pay is still not clear. The companies expect that the merger will
help them avoid certain expenses – such as the cost of upgrading Nextel’s
network – and will help them save a combined $12 billion in other expenses. In
addition, the firm will compete with giants Verizon and Cingular. But whether
those factors will translate into customer savings is unknown.
The deal still requires federal regulatory
approval, which is expected.