Sprint and Nextel to Merge

The rumors have been circulating for quite some time, but earlier this week Sprint. officially announced the merger with Nextel. This won’t be a takeover by either company to acquire the other, but an equal merger.

The new company, known as Sprint Nextel, will have about $40 billion in revenue combined, and serve more than 35 million subscribers. This would make the new company the third largest cellular provider in the United States, behind Verizon and Cingular.

What do both sides have to gain from this deal? Sprint would benefit from Nextel’s large business customer base. Nextel would benefit from Sprint’s new CDMA.-2000 platform upgrade. The upgrade would be very expensive, but not nearly as expensive as it would be if the merger never happened. Sprint will be there to burden some of the costs, plus Nextel could use some of Sprint’s facilities to ease the transition.

I have been partial to Sprint for a few years, and didn’t really like Nextel. But there’s no denying that Nextel is a great company. Out of all the cell phone companies they have the highest customer satisfaction rating and the lowest turnover rate. The one problem I have against Nextel is that their phones are still relatively big and are just now utilizing color screens. Their phone selection has been poor, but all that could change with the new company.

The merger won’t be final for quite some time. It took Cingular and AT&T a year to merge, but Sprint and Nextel have a major upgrade to work out. I predict that the merger will take two years. Both Sprint and Nextel know that this is a big opportunity, and they don’t want to fuck it up by rushing things.