Regulatory clearances are unlikely to present a significant hurdle for Sprint Nextel in a $483 million purchase of prepaid wireless provider Virgin Mobile. Sprint's Boost Mobile business will be combined with Virgin Mobile in a prepaid unit to be headed by Virgin CEO Dan Schulman. The companies hope to complete the merger this year or early next. FCC and industry officials said the deal probably won't raise major questions. "In its orders approving Verizon-Alltel and Sprint-Clearwire last November, the FCC reaffirmed its view that it excludes MVNOs and resellers from its analysis of the competitive impact of a wireless merger," said Stifel Nicolaus analysts. "While an acquisition of Sprint could trigger issues related to its continued obligations for public safety rebanding, we do not see an acquisition by Sprint of a company this size as posing problems. And while any wireless deals can provide fodder for the handset exclusivity debate, we would not see it gaining meaningful traction here." nnThe deal strengthens Sprint's position in the prepaid segment, Sprint CEO Dan Hesse said. Virgin Mobile would become a wholly owned subsidiary of Sprint, said a spokeswoman for the target company. "We expect to uncover some duplication" in staffing, she said. Headcount decisions from combining the companies will be among those made before the deal closes, she said. The deal reinforces a recent trend in wireless, analysts said: U.S. market leaders Verizon Wireless and AT&T are concentrating on the postpaid market, and Sprint and T-Mobile are increasingly competing in prepaid with smaller carriers like MetroPCS and Leap Wireless. The deal gives Sprint more heft in prepaid and helps Virgin Mobile with financial backing, said Thomas Weisel Partner analyst James Breen. But analysts also questioned whether the deal makes sense. "We are concerned that both Sprint's traditional prepaid business and the Virgin business could end up competing against one another," said J.P. Morgan's Mike McCormack.
展开▼
