Telecommunication giants merge
Published 12:00 am Saturday, December 18, 2004
WAKE FOREST – Two of the nation’s largest telecommunication providers are now one.
In an announcement made Wednesday in New York City, the boards of directors of Sprint and Nextel agreed to a merger of equals. The combination will create America’s premier communications company — a leading wireless carrier augmented by a global IP network that will offer consumer, business and government customers compelling new broadband wireless and integrated communications services.
The new company, which will be called Sprint Nextel, also intends to spin off to its shareholders Sprint’s local telecommunications business following the merger.
&uot;It will remain business as usual,&uot; said Tom Matthews, Sprint’s External Communications Manager, from his office in Wake Forest. &uot;The local telecommunications portion of the merger will be an extremely strong, stand-alone unit. We strongly feel that Sprint Nextel will be the provider of choice when it comes to local operations across the state.&uot;
Matthews also addressed job security of current Sprint employees.
&uot;That will remain business as usual as well,&uot; he noted. &uot;Most of the cost savings generated by the merger will be at the corporate level. As any good, proven business, you always look for better and more efficient ways to do business, but you still have to operate that business and you do so with the people out in the field.&uot;
Currently, Sprint’s North Carolina workforce totals 5,300. Matthews stressed it was the goal of those Sprint Nextel employees to offer the best service at the most reasonable price.
&uot;We feel we already have the best network,&uot; he said. &uot;The wireline network in and around the Ahoskie area is state-of-the-art, as is the Sonnet ring system recently installed to serve Northampton County’s new E-911 center. Both services are second to none. Now with the merger, the opportunity is there to take something that is already good and make it even better.&uot;
Sprint and Nextel currently have a combined total equity value of approximately $70 billion and serve more than 35 million wireless subscribers on their networks and 5 million additional subscribers through affiliates and partners.
The two companies, along with their affiliates and partners, operate networks that directly cover nearly 262 million people, more of the U.S. population than any other carrier.
The new company will have a balanced mix of consumer, business and government customers, as well as a strong spectrum position. Sprint Nextel will be well positioned in the fastest-growing areas of the telecommunications industry, including mobile data and push-to-talk services, where Sprint and Nextel are innovators in technology.
With Sprint’s global Internet network, the new company will be positioned to provide differentiated communications solutions through integrated applications for business and government and new broadband wireless services for consumers.
Sprint and Nextel are being valued equally in the merger and their shareholders will each own approximately 50 percent of the new company after the merger.
Existing Sprint shares will remain outstanding and each Nextel common share will be converted into new company shares and a small per share amount of cash, with a total value equal to 1.3 shares of Sprint Nextel common stock.
The exact stock/cash allocation will be determined at closing of the merger in order to facilitate the spin-off of the local telecommunications business on a tax-free basis.
The aggregate amount of the cash payment will not exceed $2.8 billion.
If the stock/cash allocation was calculated today, it is estimated that Nextel shareholders would receive about 1.28 Sprint Nextel shares and about $0.50 in cash for each Nextel share.
A highly experienced management team will lead the new company.
Gary D. Forsee, currently chairman and chief executive officer of Sprint, will become president and chief executive officer of Sprint Nextel.
Timothy M. Donahue, currently president and chief executive officer of Nextel, will become chairman of the new company.
Together they have a proven track record of leadership and nearly six decades of industry experience.
Sprint Nextel will have its executive headquarters in Reston, Va., and its operational headquarters in Overland Park, Kan.
The new company’s common stock will be listed on the New York Stock Exchange. The merger is expected to close in the second half of 2005 and is subject to shareholder and regulatory approvals, as well as other customary closing conditions.
Sprint Nextel’s anticipated deployment of new innovative products will provide additional choices for customers and enable the company to vigorously compete in the marketplace. For customers, this combination will allow Sprint Nextel to offer digital wireless service in all 50 states, Puerto Rico and the U.S. Virgin Islands; provide consumers more choice through investments in wireless multi-media, web browsing, messaging, gaming and music on the go; provide robust integrated wireless and IP-based wireline solutions to business; improve customer service and sales performance through joint capabilities; invest to deploy next-generation wireless data services, bringing new and compelling products to market to benefit consumers and businesses; and cost effectively invest to improve wireless network quality and coverage.