Sprint announced today that it’s acquiring Virgin Mobile USA in an effort to bring on more customers for its prepaid mobile phones. The deal adds up to $483 million, including the 13.1 percent of Virgin that Sprint already owns.
Sprint says it will merge Virgin with its Boost Mobile prepaid phone division, and will put Virgin chief executive Dan Schulman in charge of its overall prepaid business. With the economy causing more people to be budget conscious (preferring to buy more minutes as they use their phones rather than committing to a specific plan), prepaid phones could see serious growth — and have already contributed to Sprint’s unexpectedly strong first quarter results.
Virgin Mobile, meanwhile, has been struggling to stay competitive in the prepaid market since its initial public offering in October of 2007. while the stock has bounced back a bit from its lows in late 2008 (boosted by today’s news, it’s currently trading at around $5.25), the company has still lost a lot of value in the last couple of years.
The deal is expected to conclude at the end of this year or the beginning of 2010.
