Merger a step closer to federal approval

Tuesday, July 12, 2005 | 9:22 a.m.

WASHINGTON -- The staff of the Federal Communications Commission has recommended approval of Sprint Corp.'s $35 billion acquisition of Nextel Communications Inc., according to a source with firsthand knowledge of the deliberations.

The source, speaking on condition of anonymity because the recommendation has not been made public, said staff members looking into the deal have forwarded their findings to the agency's four commissioners.

Sprint, based in Overland Park, Kan., and Nextel, based in Reston, Va., announced the proposed merger in December. Sprint-Nextel would be the third-largest wireless provider in the country after market leaders Cingular Wireless and Verizon Wireless.

Shareholders from both companies are scheduled to vote on the merger Wednesday.

On Monday, Sprint agreed to buy affiliate U.S. Unwired Inc. for about $1 billion to end the affiliate's legal challenge to the Sprint-Nextel merger. Sprint and Nextel still face another legal challenge, this one filed by Nextel's affiliate, Nextel Partners Inc., which wants to prevent the merged company from changing its brand to Sprint.

The merger would give Sprint access to Nextel's 15.3 million subscribers, many of whom are business customers who are more profitable than Sprint's base of customers. In all, the new company would have 35 million wireless subscribers and a combined $40 billion in annual revenue.

Word of the FCC staff recommendation comes a day after the commission approved a smaller merger in the wireless world -- Alltel Corp.'s $4.4 billion acquisition of Western Wireless Corp. That union would make Alltel the nation's fifth-largest cellular telephone service provider.