Friday, December 10, 2004

NEXTEL AGREES TO BUY SPRINT!

As is typical on wall street, things are sometimes upside down and backwards. Sometimes things are turned upside down for tax purposes.

Technically FON will "buy" NXTL for 1.3 shares of FON for each share of NXTL. However, the new Executive Chairman will be from NXTL.

The key fact is that the two together will be able to cut costs and improve service. Sprint has 23 million customers but NXTL has unique features, extraordinarily low churn rates, and top management. It will be interesting to see if the land line business is retained. The growth is in wireless.

I am excited about the long-term prospects for the merged company. If you own neither, buy FON with confidence. The exact price will wiggle until the deal is closed but a cash pool has been set up to balance out the relative values. If you buy FON, you will avoid trading out your shares.

2 comments:

seeingdouble said...

How can anyone be excited about this? I left Sprint, with their HORRIBLE customer service, constant billing errors, and all around BS, to go to Nextel. Now I'm going to be back at Sprint! Cell phone service in general has been on a steady decline with the recent mergers, the bigger they get, the worse their customer care gets.

Jack Miller said...

Almost everyone who has ever owned a cell phone can tell dozens of horror stories. I paid around $2,000 for my first car phone in 1983 and it was a sorry excuse for a phone; the coverage was tiny. I have been on 6 or 7 carriers and there were always problems. Verizon never got a single invoice correct. This blog is about making money. The growth in cell phone usage is finally ready to take off. Cell phones are quickly becoming TV's, radios, computers, and more. The new ESPN and the new Disney phone companies will offer their shows over the new companies network.

So far, my family has made 8 times our money on NXTL. NXTL offers superior services, has the lowest churn rate and the highest usage per subscriber. NXTL is now ready to grow some more. The new company may be called Sprint in the same way that North Carolina National Bank is called BankAmerica and First Union is now called Wachovia. However, the Executive Chairman of the board of the new company currently is a NXTL officer. First Union bought Wachovia Bank but Wachovia still lives. NXTL has the goods to offer 23 million Sprint subscribers.