Sprint Now Owns Virgin Mobile USA
Shares of Sprint Nextel Corp. (S) closed in the red on Tuesday – along with the rest of the stock market – after it said it has finalized the Virgin Mobile USA (VM) merger.
Its stocks hit $3.75, down 3.85 percent.
Sprint announced in July it would Virgin, which already used the Sprint network to provision its services, for $483 million (although the total comes closer to $721 million based on stock values). The move gives Sprint – operators of the Boost Mobile brand – a huge chunk of the prepaid wireless market; analysts have praised the strategy as Sprint continues to struggle to keep its more valuable post-paid subscribers. The hope is that Sprint will be able to balance its post-paid losses with prepaid gains.
Early on Tuesday, Virgin Mobile USA’s shareholders approved the terms of the Sprint takeover, ending the nearly four-month M&A process.
Virgin Mobile USA no longer has any debt, and ratings service Standard & Poor’s has withdrawn its ratings on the mobile virtual network operator since it has stopped trading on the New York Stock Exchange. Meantime, Sprint has paid to license the Virgin Mobile USA trademark, paid the required tax receivable contracts and paid a subordinated secured revolving credit agreement.
On the operations side, Dan Schulman, who served as Virgin Mobile USA’s CEO, has taken over as president of Sprint’s prepaid group.
And Sprint made sure to emphasize in a press release that its Boost Mobile and Virgin Mobile USA customers “will continue to enjoy the benefits of their current phones, service plans and features and do not need to take any action.”
Now Sprint can turn its attention to wrapping the recently announced iPCS acquisition. iPCS, a Sprint affiliate, sued its network services provider over the Virgin Mobile USA deal, citing unfair competition in its coverage areas. In October, Sprint quashed the lawsuit by buying iPCS for $831 million.
