NEW YORK – Sprint and Nextel have tentatively come to terms in a $35 billion merger deal that would create the nation?s No. 3 cellular carrier with nearly 39 million subscribers, the Wall Street Journal reports. The merged company would then spin off Sprint’s traditional land-line telephone service to shareholders.
The boards of both companies are scheduled to meet on Tuesday, sources said. If the terms of the deal are approved, it could be announced as soon as Wednesday. Verizon is mulling whether to make a move in response. And Motorola, the sole hardware vendor for Nextel, is likely to get hurt in the proposed Sprint-Nextel deal.
Sources said current Sprint Chief Executive Gary Forsee will continue to serve in that role at the new, largely wireless company, which will be called Sprint-Nextel. Nextel Chief Executive Timothy Donahue would serve as executive chairman of the new company, which would be the nation’s third largest cell phone operator.
The company would have a 50-50 split among board members and would have a corporate headquarters in Reston, Va., where Nextel is currently based, with an operating headquarters in Overland Park, Kan., where Sprint is currently based. The spin-off would maintain its headquarters in Overland Park, Kan.
Nextel, the smallest of the country’s national wireless carriers, has grown rapidly because of its unique “push to talk” service, which essentially turns cellphones into walkie-talkies and is popular with businesses. Sprint, which began life as a long-distance phone company, now operates the country’s third biggest cellular operation with 23.2 million customers.
The deal would give the new company the heft to battle with the industry’s two giants, Verizon Wireless and Cingular Wireless. Verizon Wireless is a joint venture of Verizon Communications and Vodafone Group and Cingular is owned by BellSouth and SBC Communications. The three companies would control 75 percent of the U.S. cellular market.
