For most of its two decades on the American landscape, the cellphone industry has been known for its freewheeling upstarts and aggressive competition. Yet in just a few years, a wave of mergers has left the industry dominated by a handful of giant companies, with smaller contenders having to carve out niche markets to survive.
The industry was further recast on Wednesday when Sprint and Nextel Communications -- two of the more distinctive and entrepreneurial mobile phone companies -- formally announced a merger that will create a formidable No. 3 carrier. The new company, to be called Sprint Nextel, will join Cingular Wireless, which has 46 million subscribers, and Verizon Wireless, with 42 million, in an elite trio that will control three-quarters of the market.
The deal is worth US$35 billion and creates a company with US$40 billion in annual revenue and 35.4 million subscribers. The merger is expected to be completed in the second half of next year.
The new industry dynamic, where a handful of mega-sized firms battle each other head-on, is a far cry from just a few years ago, when mobile carriers were divided by region and shaped by the personalities of their founders.
Wireless technology has advanced quickly, making it possible for cellular carriers to expand and offer cheaper service. Consolidation in less than a decade has helped put cellphones in the hands of 80 percent of US adults.
The pressure to consolidate exists even among the biggest players. Indeed, Verizon Wireless is considering whether to make a separate bid for Sprint alone. It could, in theory, do so before Sprint's merger with Nextel is finalized. Verizon Wireless, which is owned by Verizon Communications and Vodafone, would have roughly 66 million subscribers if it acquired Sprint, which uses the same cellular technology.
Sprint and Nextel described the deal as a merger of equals, but Sprint is in essence acquiring Nextel. Under the terms, Sprint shareholders would retain their shares, while Nextel shareholders would get cash and stock worth about 1.3 shares in the combined company for each of their shares.
At current rates each Nextel share would be exchanged for 1.28 Sprint Nextel shares and US$0.50 in cash. The exact breakdown for Nextel shareholders will be determined later, but the cash payment will not exceed US$2.8 billion, the companies said.
Sprint and Nextel are optimistic that their size, technology and marketing will make them a strong counterweight to their rivals.
"This is about one plus one equaling much more than two," said Sprint's chairman, Gary Forsee, who will become the chief executive of the new company. Nextel's chief executive, Timothy Donahue, will become the new company's chairman.
The new combined company also hopes to save US$12 billion over the next few years. Nextel, for example, will be able to use Sprint's next-generation data network rather than build its own. The companies, which together will have 77,000 employees, may also reap some savings from job cuts, but did not say on Wednesday how many they plan to eliminate.
The new company will have its executive headquarters in Reston, Virginia, where Nextel is located, and its operational base in Overland Park, Kansas, home to Sprint. But the dual headquarters could be a sign that the companies are reluctant to relinquish power. This could spell trouble, industry experts said, if corporate pride hampers efforts to blend their networks, executive ranks and marketing messages.
The government is aiming to recruit 1,096 foreign English teachers and teaching assistants this year, the Ministry of Education said yesterday. The foreign teachers would work closely with elementary and junior-high instructors to create and teach courses, ministry official Tsai Yi-ching (蔡宜靜) said. Together, they would create an immersive language environment, helping to motivate students while enhancing the skills of local teachers, she said. The ministry has since 2021 been recruiting foreign teachers through the Taiwan Foreign English Teacher Program, which offers placement, salary, housing and other benefits to eligible foreign teachers. Two centers serving northern and southern Taiwan assist in recruiting and training
WIDE NET: Health officials said they are considering all possibilities, such as bongkrekic acid, while the city mayor said they have not ruled out the possibility of a malicious act of poisoning Two people who dined at a restaurant in Taipei’s Far Eastern Department Store Xinyi A13 last week have died, while four are in intensive care, the Taipei Department of Health said yesterday. All of the outlets of Malaysian vegetarian restaurant franchise Polam Kopitiam have been ordered to close pending an investigation after 11 people became ill due to suspected food poisoning, city officials told a news conference in Taipei. The first fatality, a 39-year-old man who ate at the restaurant on Friday last week, died of kidney failure two days later at the city’s Mackay Memorial Hospital. A 66-year-old man who dined
‘CARRIER KILLERS’: The Tuo Chiang-class corvettes’ stealth capability means they have a radar cross-section as small as the size of a fishing boat, an analyst said President Tsai Ing-wen (蔡英文) yesterday presided over a ceremony at Yilan County’s Suao Harbor (蘇澳港), where the navy took delivery of two indigenous Tuo Chiang-class corvettes. The corvettes, An Chiang (安江) and Wan Chiang (萬江), along with the introduction of the coast guard’s third and fourth 4,000-tonne cutters earlier this month, are a testament to Taiwan’s shipbuilding capability and signify the nation’s resolve to defend democracy and freedom, Tsai said. The vessels are also the last two of six Tuo Chiang-class corvettes ordered from Lungteh Shipbuilding Co (龍德造船) by the navy, Tsai said. The first Tuo Chiang-class vessel delivered was Ta Chiang (塔江)
EYE ON STRAIT: The US spending bill ‘doubles security cooperation funding for Taiwan,’ while also seeking to counter the influence of China US President Joe Biden on Saturday signed into law a US$1.2 trillion spending package that includes US$300 million in foreign military financing to Taiwan, as well as funding for Taipei-Washington cooperative projects. The US Congress early on Saturday overwhelmingly passed the Further Consolidated Appropriations Act 2024 to avoid a partial shutdown and fund the government through September for a fiscal year that began six months ago. Under the package, the Defense Appropriations Act would provide a US$27 billion increase from the previous fiscal year to fund “critical national defense efforts, including countering the PRC [People’s Republic of China],” according to a summary