On Wednesday, Sprint Nextel Corp. (S -1.92%) consented to buy air wave licenses and customers in the Midwest from the firm US Cellular Corp. (USM -12.40%) by paying USD 480 million, in the first transaction of Sprint since it got a multi billion-dollar cash Soft bank Corp. (9984.TO +0.11%) as a part of this Japanese firm’s contract to acquire the 3rd largest wireless carrier in US.
The agreement with US Cellular, which is deemed to be small in the telecommunications industry, is the latest indication of a developing gesture of consolidation in the field of wireless communication.
Dan Hesse. The Executive of Sprint said that the agreement will considerably increase the network capacity of Sprint in vital markets like St. Louis and Chicago. In all, the deal will offer Sprint the licenses to airwaves in part of Indiana, Illinois, Ohio, Michigan, and Missouri in addition to 585,000 customers in all these places, for a cash of $480 million plus some unrevealed liabilities. Sprint will make use of these air wave licenses to increase its coverage in all these regions.
US Cellular told that the deal will permit it to concentrate on markets where it has powerful positions and assist it to restructure its operations. This agreement, which is anticipated to be completed by the mid of upcoming year, is conditional on regulatory review.
The small contract is anticipated to be the foremost of other transactions that could assist Sprint to become equal to other industry leaders like Verizon Wireless and AT&T Inc. (T -3.34%), which are each almost double the size of Sprint and possess much profound pockets.
Hesse has states his wish to have a role in this industry consolidation, but his choices have been restricted by a poor balance sheet with lots of debt and little cash.
Presently, with the new funds from Softbank, Hesse told that the firm can think of strategic choices that were not accessible earlier.
This acquirement steps in after Sprint inked a $20.1 billion contract on October 15 to trade a 70 percent stake in the firm to Softbank. A week later, it got $3.1 billion by trading bonds to a subordinate firm of the Japanese telecom and Internet firm.
In a regulatory filing previously this week, Sprint told that it has plans to discard the Nextel name following the closure of the Softbank deal. It is also not looking forward to performing any lay-offs due to the Softbank contract.