Sprint-Nextel, Virgin Mobile Merger Approved
The Federal Trade Commission on Monday announced it would allow a proposed deal between Sprint-Nextel Corp and Virgin Mobile USA Inc.
The FTC granted clearance for the two companies to complete the $483 million merger in which Sprint will purchase Virgin Mobile, making Sprint the third-largest wireless provider.
Analysts told Reuters that the deal appears to represent Sprint’s attempt at moving into the prepaid cellular market, which allows customers to buy different packages of allotted talk and text time.
Sprint had already been renting space to Virgin Mobile prior to the approved proposal, which had some experts scratching their heads in confusion as to why the company would offer to merge with the smaller network.
According to Dow Jones Newswires, more consumers are expected to “tighten their belts” during the current economic recession, which may make prepaid plans more alluring.
According to Reuters, Boost, Leap Wireless and MetroPCS Communications Inc “have seen strong growth in prepaid services that offer unlimited calls for a monthly fee.”
The merger could face a review from the Federal Communications Commission.
—
On the Net: