Government gives blessing to Sprint-Nextel wireless merger

Wednesday, August 3rd 2005, 7:21 pm
By: News On 6

WASHINGTON (AP) _ Sprint Corp.'s $35 billion acquisition of Nextel Communications Inc. got the go-ahead Wednesday from regulators, bolstering Sprint's status as the No. 3 wireless company in the United States.

After the Federal Communications Commission approved the deal, the Justice Department gave its blessing a short time later.

``This action will ensure that consumers continue to receive the benefits of wireless competition, such as reduced prices and increased coverage,'' said the commission's chairman, Republican Kevin Martin. ``In addition, consumers can expect improved service quality and more advanced services.''

A Democratic commissioner, Jonathan Adelstein, said the companies pledged to use some of their spectrum to provide wireless broadband services to at least 30 million people in large and small markets.

``This is truly a banner commitment for the wireless broadband industry,'' Adelstein said.

Antitrust investigators determined the merger ``would not give the companies market power in the areas in which they compete'' and that wireless customers ``will continue to have a number of other carriers from which to choose after the merger.''

The new company will have more than 40 million wireless customers and $40 billion in annual revenue. It will present strong competition for Cingular Wireless and Verizon Wireless, the market leaders.

But consumer advocates worried that the deal may leave just three major players.

``The good news is that the merged companies should be able to better compete against Verizon and Cingular,'' said Gene Kimmelman, senior policy director at Consumers Union, the publisher of Consumer Reports magazine.

``The bad news is that we may have lost the opportunity to also preserve enough spectrum for a fourth strong competitor in this market,'' Kimmelman added.

Shareholders from both companies approved the merger last month.

The combination will give Sprint access to Nextel's 15.3 million subscribers, many of whom are business customers. In return, Nextel will avoid a costly upgrade of its own network.

Officials have said there will be some layoffs. The combined company is expected to have about 60,000 employees, almost equal to the companies' current numbers.

The new Sprint Nextel Corp. plans to spin off Sprint's local telephone service as its own business early next year. That would form what would be the fifth-largest local telecommunications company in the U.S., with 7.6 million access lines in 18 states.