Sprint Acquires Virgin Mobile USA, Expands Prepaid Presence
Well, isn't this an interesting development? Just a few short months after Virgin Mobile--one of the few remaining MVNOs left in America--introduced a delightful new pay-as-you-go mobile broadband plan, the company is now be swallowed whole by Sprint Nextel. If you're shocked to hear that the USA's sole Palm Pre carrier is busying buying up companies, you aren't alone.
The news of the takeover comes as quite the shock to the entire industry, but we suppose we can at least understand it. You see, both Virgin Mobile and Boost Mobile--the latter of which is already under Sprint's umbrella--utilize Sprint's infrastructure and network in order to serve customers, so it's not like Sprint wasn't already connected. Furthermore, it's pretty much the only option for Sprint to increase its subscriber base in a hurry. When Verizon Wireless picked up Alltel, it suddenly became America's largest wireless carrier, and now Sprint's looking to up its size as well.
Virgin Mobile USA is being purchased for $483 million, which includes the value of Sprint’s current 13.1% fully diluted ownership interest. Of course, it's not a straight-up cash payout, with terms of the agreement stipulating that "each public stockholder, holding in aggregate approximately 39.7 million shares on a fully diluted basis or 43.3% ownership, will receive Sprint shares having a 10-day average closing price equivalent to $5.50 per Virgin Mobile USA share."
If you're still scratching your head an trying to figure out why Sprint would do such a thing during a time when it's bleeding customers and trying to get its own business in order, listen at this: "This acquisition will strengthen Sprint’s position in the growing prepaid segment by bringing together under one umbrella the iconic Virgin Mobile brand with Sprint’s successful Boost Mobile business. These complementary prepaid brands, each with a distinctive offer, style and appeal to different customer demographics, will continue to serve existing and prospective customers following the completion of the transaction."
So it looks like Sprint's your go-to place for postpaid, prepaid and iDEN service in America. Talk about a one-stop shop--if it had the iPhone, anyway.
The news of the takeover comes as quite the shock to the entire industry, but we suppose we can at least understand it. You see, both Virgin Mobile and Boost Mobile--the latter of which is already under Sprint's umbrella--utilize Sprint's infrastructure and network in order to serve customers, so it's not like Sprint wasn't already connected. Furthermore, it's pretty much the only option for Sprint to increase its subscriber base in a hurry. When Verizon Wireless picked up Alltel, it suddenly became America's largest wireless carrier, and now Sprint's looking to up its size as well.
Virgin Mobile USA is being purchased for $483 million, which includes the value of Sprint’s current 13.1% fully diluted ownership interest. Of course, it's not a straight-up cash payout, with terms of the agreement stipulating that "each public stockholder, holding in aggregate approximately 39.7 million shares on a fully diluted basis or 43.3% ownership, will receive Sprint shares having a 10-day average closing price equivalent to $5.50 per Virgin Mobile USA share."
If you're still scratching your head an trying to figure out why Sprint would do such a thing during a time when it's bleeding customers and trying to get its own business in order, listen at this: "This acquisition will strengthen Sprint’s position in the growing prepaid segment by bringing together under one umbrella the iconic Virgin Mobile brand with Sprint’s successful Boost Mobile business. These complementary prepaid brands, each with a distinctive offer, style and appeal to different customer demographics, will continue to serve existing and prospective customers following the completion of the transaction."
So it looks like Sprint's your go-to place for postpaid, prepaid and iDEN service in America. Talk about a one-stop shop--if it had the iPhone, anyway.
