Shareholders approve Sprint's acquisition of Nextel to create new No. 3 wireless company

OVERLAND PARK, Kan. (AP) _ Shareholders gave overwhelming support to Sprint Corp.'s $35 billion acquisition of Nextel Communications Inc. on Wednesday, in another step toward creating the nation's

Monday, July 11th 2005, 10:04 am

By: News On 6

OVERLAND PARK, Kan. (AP) _ Shareholders gave overwhelming support to Sprint Corp.'s $35 billion acquisition of Nextel Communications Inc. on Wednesday, in another step toward creating the nation's No. 3 wireless company.

Meeting in Reston, Va., more than 70 percent of Nextel shareholders voted to approve the deal. At least 96 percent of Sprint shareholders, meeting in Overland Park, Kan., approved the deal.

The combination, which still requires approval from the Federal Communications Commission and the Justice Department, forms a company with more than 40 million wireless customers and $40 billion in annual revenue.

It also creates a solid competitor to industry leaders Cingular Wireless and Verizon Wireless. While the deal's effects on consumers is unclear, it will likely continue the drive in wireless toward lower prices, faster Internet speeds and expanded add-ons for cell phones, ranging from ringtones to games to video programming.

The deal is expected to close in the third quarter.

FCC staff members have reportedly recommended approval of the merger and have forwarded their findings to the agency's four commissioners. No timetable has been given for final approval.

Opposition to the deal has been light, restricted to some consumer advocates worried over the continued consolidation within the telecommunications industry and certain affiliates of the two companies, possibly angling for better terms after the merger.

Sprint on Monday cleared one of those obstacles by agreeing to buy Lake Charles, La.-based U.S. Unwired Inc., which had filed in federal court for an injunction of the merger, saying it would allow Sprint to violate an exclusivity agreement. Under the deal, Sprint will pay about $1 billion in cash and assume $266 million of the company's debt and both sides will ask the federal judge to set aside the injunction request.

On Wednesday, Sprint and Nextel said another Sprint affiliate, UbiquiTel Inc., had filed suit in Delaware, claiming the merger would violate its exclusivity agreement with Sprint. The Conshohocken, Penn.-based company, with about 413,000 subscribers, is not asking to stop the deal.

Nextel Partners Inc., which sells Nextel services in 31 states, has also filed suit, seeking to prevent the unified company from making Sprint the lead brand. The Kirkland, Wash.-based affiliate also is arguing that the merger will require the unified company to buy the two-thirds of Nextel Partners that Nextel doesn't own.

As part of the ``merger of equals,'' Nextel shareholders will receive 1.3 shares of the new Sprint Nextel Corp. for each of their shares, as well as some cash. The companies said they are structuring the merger to prevent tax liability, so officials don't know yet how much Nextel shareholders will receive. But they said the amount of money to be paid is capped at $2.8 billion.

The unified company plans to spin-off Sprint's local telephone service as its own business early next year. Once separate, the as-yet unnamed unit will be the fifth largest local telecom in the country with 7.6 million access lines in 18 states.

The new company will have its corporate headquarters in Reston. An operations headquarters will remain at Sprint's 200-acre campus in Overland Park. The company is expected to have around 60,000 employees, which is about equal to the current Sprint and Nextel work forces, although officials have said there will be layoffs.