US mobile operator Sprint Nextel is buying much smaller rival Virgin Mobile USA in a deal that values the company at USD483m. Sprint already owns a 13.1% stake in the firm and hopes to complete the buyout by the end of the year.
Virgin will join Sprint’s existing pay-as-you-go mobile brand Boost Mobile, adding 5m customers to Sprint’s customer base. Boost has performed well for Sprint, providing an encouraging counterweight to Sprint's sagging performance in the subscription market.
?Prepaid is growing at an unprecedented rate with consumers keenly focused on value,? says Sprint CEO Dan Hesse. ?Virgin Mobile is an iconic brand in the marketplace that will complement our Boost Mobile brand.?
Sprint says it will honour Virgin’s outstanding debt, which the company estimates to be no more than USD205m in cash and cash equivalents. The deal values Virgin’s stock at USD5.50 a share, 31% more than the company’s most recent share price.
StrategyEye's related categories: Mobile Operators - General
StrategyEye's related companies: Sprint Nextel, Virgin Mobile
