Sprint to buy Virgin Mobile for prepaid business

Deal set at $483M; Virgin Mobile CEO to move to Sprint

Sprint Nextel Corp. will acquire Virgin Mobile USA for $483 million, the companies reported today.

Sprint said the deal will help it strengthen its standing in the prepaid wireless market. Under prepaid plans, customers pay for all of their cell phone usage in advance. That differs from most plans in the U.S., in which customers pay after they use the service, usually at the end of the month.

Prepaid service is more popular in Europe than it is in the U.S., and it's seen as a way for carriers to round out the variety of customers they attract, since prepaid customers tend to be younger and less likely to have easy access to credit.

Sprint already had a 13% interest in Virgin Mobile USA. As part of the deal, Sprint will retire all of Virgin Mobile's debt, which is expected to be no more than $205 million at the end of September.

Dan Schulman, CEO of Virgin mobile USA, will report to Sprint CEO Dan Hesse when the transaction closes in late 2009 or early 2010. Virgin Mobile stockholders will receive shares of Sprint common stock based on an exchange ratio described in Sprint's press release.

Copyright © 2009 IDG Communications, Inc.

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