Sprint to Acquire Virgin Mobile USA
July 28, 2009 by Mark Ellis
Filed under Business
In a move that signals changing ambitions on the part of Sprint, America’s third-largest cell phone service, has decided to acquire Virgin Mobile USA for $483 million in shares and cash. Virgin Mobile USA, a low-end prepaid mobile company, will allow Sprint to continue its foray into the prepaid market.
Sprint, which will post its quarterly results tomorrow, already has a prepaid network called Boost, allowing users to pay a set monthly fee in exchange for unlimited calling capability. Thus, Sprint’s decision to buy out Virgin Mobile USA has puzzled some analysts, considering that Sprint already owned 13.1 percent of the company and rented out some space on its network to Virgin Mobile USA.
Analysts have suggested that Sprint’s decision to acquire Virgin Mobile USA comes due to a disappointing performance in its postpaid sector, in which customers pay monthly bills for their cell usage. Sprint has stated that the acquisition will increase cash flow for the company but it has not released any specific estimates for the buyout’s impact.
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