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SPRINT AND NEXTEL PLAN $35 BILLION MERGER
Move Would Meld Two Different Marketing Worlds Together
The four FCC commissioners voted unanimously. "This action will ensure that consumers continue to receive the benefits of wireless competition, such as reduced prices and increased coverage," FCC chairman Kevin Martin said in a statement.
The Justice Department's Antitrust Division, in a statement, found the merger would not hinder competition among wireless service providers. Echoing the FCC statement, the division said "purchasers of mobile wireless services will continue to have a number of other carriers from which to choose after the merger."
The government said Sprint/Nextel will be the only wireless service provider without ties to a regional telephone company. Cingular, for example, is owned jointly by SBC Communications and Bell South, while Verizon Wireless is partly owned by Verizon Communications.
Other giant telecom mergers still before the two regulatory bodies include SBC's pending acquisition of AT&T Corp. and Verizon Communications planned purchase of MCI.
Marketplace name: Sprint
According to a June announcement, the official name of the combined telecom will be Sprint Nextel, but Sprint will be the name used in the marketplace. Nextel, remaining a product brand, will have a presence in Sprint stores. Advertising will include the line "Together with Nextel." Ads for Nextel will say, "Together with Sprint."
Designated chief marketing officer of Sprint Nextel, Mark Schweitzer, assigned ad agency assignments to Nextel's shop, Omnicom Group's TBWA/Chiat/Day, New York, for the post-merger relaunch, estimated at more than $500 million, and consumer advertising, and Sprint's agency, Publicis Groupe's Publicis & Hal Riney, San Francisco, which will handle business-to-business advertising.
Last year, Sprint spent $857 million in measured media, according to TNS Media Intelligence, while Nextel spent $339.7 million. Mr. Schweitzer has indicated he expects the merger will result in a cut in ad spending.
Current pecking order
Before the merger, Nextel was the nation's No. 5 carrier and Sprint was No. 3; the new company fortifies its position over No. 4 T-Mobile USA. Sprint Nextel, however, remains a distant third to the two goliaths in the space, Cingular Wireless, which took the lead last year following its acquisition of AT&T Wireless. Verizon Wireless, meanwhile, formerly the category's longtime leader, has begun to gain subscribers at a faster rate than Cingular, leading a number of analysts to predict Verizon Wireless will regain its No. 1 position in a year and a half or less. In terms of subscribers, Sprint has 23 million while Nextel has about 15 million.