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Sprint and Nextel mull mobile merger - WSJ

Wall St abuzz with US teleco talk

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Sprint - the US's third biggest mobile telco - and fifth-place rival Nextel are reportedly in talks about a possible merger. The deal would create a carrier with approximately 39m subscribers and a market value of around $70bn.

Market leader Cingular bought AT&T Wireless Services for $41.3bn in October creating more pressure on rivals to increase their size in order to compete effectively. The Wall Street Journal quotes unnamed source in reporting that negotiations between Sprint and Nextel are ongoing, but a deal is far from certain. Any agreement would almost certainly be an all-share transaction, it adds.

The putative deal would consolidate Sprint's position in the number three slot behind Cingular and Verizon Wireless and ahead of T-Mobile while reducing the number of large US mobile-phone carriers from five to four. A merger would give Sprint access to Nextel's business customers, who tend to be more loyal and spend more than regular consumers thanks in part to Nextel's popular "walkie-talkie" mobile service. Meanwhile Cingular is further ahead than Verizon in selecting technology to roll out 3G mobile services.

Shares of Sprint rose from under $23 to $25.04 on rumours of a possible deal. Nextel shares were up from $28 earlier this week to $29.61. ®

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Sprint spends $3bn on 3G
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