Sprint Nextel said it completed its $483 million deal to acquire Virgin Mobile USA, a move that will double its bet on prepaid wireless--one of the few growth engines this year in the wireless operator.
The deal had been expected to close in the fourth quarter. Under the transaction, Virgin Mobile shareholders will own around 3 percent of Sprint. Virgin Mobile CEO Dan Schulman will lead Sprint's prepaid business, and will be responsible for the prepaid segment's growth and business strategy. Matt Carter will continue to run Sprint's prepaid Boost Mobile brand and will report to Schulman.
One challenge for Sprint will be juggling the Virgin brand with Boost, which shook up the wireless market earlier this year with the introduction of its $50 monthly unlimited plan. Sprint, which has been losing postpaid subscribers at a steady clip this year, also will have to try and turn around Virgin's business, which has been struggling itself with subscriber losses and high churn rates.
As Sprint integrates Virgin Mobile's operations into its own, the company will be able to use its larger scale and position in the market to exert leverage over phone choices and deals with vendors. However, its chief challenge may be maintaining its strong prepaid business, which has been a crutch in the face of Sprint's continued postpaid subscriber losses.
For more
- see this release
- see this AP article
- see this Dow Jones Newswires article (sub. req.)
Related Articles:
Sprint faced bidding war with unnamed company for Virgin Mobile
FTC approves Sprint-Virgin deal
Class action claims Virgin Mobile undervalued in Sprint deal
Virgin Mobile's profit surges, but subscriber losses continue
Sprint buying Virgin Mobile USA for $483M