Sprint Nextel has decided to double down thier bet on prepaid, and complete the purchase of Virgin Mobile for $483 Million. Shareholders of Virgin will end up owning 3% of Sprint as part of the deal. Virgin Mobile CEO Dan Schulmas was welcomed to the Sprint family in put in charge of Sprints prepaid business. Matt Carter will maintain control over the Boost Mobile brand, but will report to Schulman. The company will be working to maintain both brands in the face of the post paid subscriber loss they have been experiencing. Boost can't be helping in this area pulling subscribers with the lure of unlimited calling for $50 per month. Virgin Mobile has also been plauged with high churn rates. I have to say, I am a little suprised that Sprint was willing to purchase a failing MVNO with the same problems as their own post-paid business.
Unless Sprint has a card up their sleave, I see this being another in a long string of poor descisions made by Sprint.
Sprint plans to leverage their new size to tout better deals with vendors for handset selection. This purchase shows how liquid the company is in the face of having their credit rating cut just last week with the outlook not looking good. Moody's droped Sprints Credit rating last week siting growing concern over their loss of post-paid market share.
