Sprint, Nextel to merge

| Wednesday, December 15, 2004

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 businesses.

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.