What Next, Sprint Nextel?

Today probably comes as little surprise to anyone. Sprint (NYSE: FON  ) will purchase Nextel (Nasdaq: NXTL  ) for $35 billion, resulting in a company that will be called -- you guessed it -- Sprint Nextel. This deal will result in the third-largest wireless concern.

Joined, Sprint and Nextel will post $40 billion in sales and boast more than 35 million customers. The only other companies that will be ahead of this new wireless concern will be Cingular Wireless (a joint venture between SBC (NYSE: SBC  ) and BellSouth (NYSE: BLS  ) and Verizon Wireless (a unit of Verizon (NYSE: VZ  ) , of course.)

Fool contributor Dave Mock has been following the slowly dwindling ranks of the top wireless services providers as they make deals with one another. He has pointed out in the past that the industry has been ripe for consolidation, and closely tracked this developing story as well as the Cingular/AT&T Wireless marriage. Now, as he commented on this past Monday, the big six in wireless have shrunk to four -- namely, Cingular, Verizon, Sprint Nextel, and T-Mobile.

Despite the fact that telecom has been down and out for quite some time, wireless services have proven a bright spot in the industry. Sprint's courtship with Nextel also exposes it to Nextel's strongest suit -- its push-to-talk, walkie-talkie service, which has proven to be its most popular product, as well as its customer base, which Mock pointed out is a tempting one, spending about $70 per month.

The companies speak of $12 billion in cost savings related to the combination. In the meantime, though, questions and concerns about how easy it will be to Sprint and Nextel integrate are hardly uncalled for -- or unprecedented. For now, investors are on hold as we all see how the next stages of consolidation unfold.

SBC is aMotley Fool Stock Advisorpick. What else makes the grade? Try the service for six months, risk-free.

Alyce Lomax does not own shares of any of the companies mentioned, although she's been a Sprint PCS user for quite some time.


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