The Sprint / Nextel merger story has just gotten a lot more interesting: The Wall Street Journal is reporting [paid subscription req.] another bombshell in today's issue: Verizon Wireless has gotten the OK from partner (and wireless giant) Vodafone to make a bid for Sprint. Verizon Wireless and Sprint use the same wireless technology (CDMA) making a merger seemingly more simple than with Nextel.
bq. Vodafone, Europe's largest wireless company, supports a Verizon takeover of Sprint. For one thing, Vodafone isn't interested in buying Sprint on its own, people close to the company say, but it believes a deal would boost its own profit. Vodafone also believes the industry will undergo further consolidation, so whatever entity Vodafone inhabits needs to be as strong as possible. Vodafone would aim to maintain a 45% stake in any new entity involving Sprint, the same as it has in Verizon Wireless today, people familiar with the matter said. That means Vodafone would have to pay as much as 45% of the takeover price of Sprint; the takeover price could top $40 billion.
A Verizon Wireless buyout of Sprint would make the company once again the largest in the country with over 65 million customers. Cingular took the top spot just weeks ago after finishing its purchase of AT&T Wireless.
Benefits of the deal include valuable spectrum for EV-DO and becoming the largest carrier again. However, the deal would also bring a lot of land line service to Verizon (part owner of Verizon Wireless), a business that isn't looking especially bright in the future. Antitrust could be a hard process as well, with more than 1/3 of the nation's wireless customers coming from one carrier.
For Nextel, a Verizon Wireless buyout of Sprint would be tough--the carrier would be forced to do network upgrades (to the tune of $3 billion) by itself.
As always, MobileTracker will watch this story closely and bring you up-to-the-minute coverage.
More Sprint / Nextel merger coverage
* Sprint and Nextel enter merger talks
* Sprint / Nextel reach tentative deal
* Sprint / Nextel merger may close Wednesday