Share:
Add to Favorites   |  

Sprint Nextel Purchases $483 Million In Virgin Mobile Prepaid Minutes

3196 views

Sprint Nextel announced this morning that they will purchase Virgin Mobile USA. The company, which specializes in prepaid mobile phone service, started as a joint venture between Sprint and Virgin, and Sprint owns 13% of their stock. Virgin Mobile USA phones already use the Sprint network.

Why would they do such a thing? To remove and acquire a competitor in the growing prepaid mobile market.

According to the Wall Street Journal:

As consumers tighten their belts amid an economic slowdown, more people are gravitating toward cheaper pre-paid plans that don't require lengthy service contracts. The U.S. pre-paid market is expected to grow by a compounded annual growth rate of 3.9% through 2014, according to market research firm Atlantic-ACM. The firm estimates that Sprint and Virgin Mobile combined control 17% of the market.

The deal is a $483 million stock swap, and will be finalized in early 2010.

Sprint Expands Pre-Paid Ops With Virgin Mobile Buy [Wall Street Journal]
Sprint to Buy Virgin Mobile USA [NY Times]

Post a comment

Comments:

41
user-pic

Hmm kinda sucks really. The fewer competitors there are, the less the consumer benefits. One reason cell phone plans go up every year, when they should be going down. Now, $50, $60 are considered "cheap" plans. I remember being able to get plans for $20, $25 when I first got a cell phone about 6 years ago.

Now they will buy up all the prepaid carriers and increase costs so they aren't a cheap alternative.

user-pic

And they had a Target employee buy those minutes with his employee card, so they save 4.83 million!

user-pic

@Saboth: My first plan with Verizon back in uhhh, 98, I think? Yeah, 98, I was 14, was 35 bucks a month for unlimited calling in the north east. It was also a tiny little black phone with a yellow/black screen (like the GameBoy) and a flip down cover over the buttons.


But aside from the cost going up now, in 2009, so has my service. I have no roaming nationwide now, unlimited minutes and many other features not available to me in 1998.


The cell phone was my dad's idea because I was starting to branch out and he wanted to be able to reach me, before anyone questions my parents parenting abilities.

user-pic

@JustinSane07: Damn, I just realized a mistake. My plan in 98 was north east only for 300 minutes a month, not unlimited. I meant to change that before I hit submit.

user-pic

@FrankieAvalonin'_GitEmSteveDave:
I realize that you are joking, but I didn't think that employee discounts were good for things like ppd cell phone minutes...

user-pic

@Saboth: I fully agree, we have the same problem here in Canada; you likely have 2 options which will vary depending on where you live(Bell/Rogers, Shaw/Telus, VideoTron/whoever). Your two options will both shamelessly gouge you, collude to keep prices high, and combine to drive any new entrants to the market out of business as quickly as they can.


I'm actually a Virgin Mobile customer as I got so sick of their nonsense (the $7 "system access fee" and three year contracts anyone?) I felt that pre-paid was the only sane option. If Virgin Canada gets bought out I may just go without a cell for a while. If only the CRTC regulated the industry instead of letting the regional duopolies run hog wild we may have something approaching the affordable, high quality services found in Asia and Europe instead of being stuck in a digital ghetto. Doesn't seem likely, but I can hope.

user-pic

@temporaryerror: They're good on anything at Target because they're a flat 10% off.

user-pic

boost mobile is not a bad deal either

user-pic

I've been using Virgin for a number of years now with no problems, even after switching phones twice. I hope things don't start to suck with Sprint.

user-pic

@Saboth:


My first plan was $20/month, included 20 minutes, no roaming, no long distance (1996). Now, my plan is $40, but includes 400 anytime minutes, nationwide roaming, unlimited nights and weekends, unlimited long distance. And, it's 13 years later, so the price of everything has gone up. Bang for the buck, I think I'm ahead.

user-pic

@FrankieAvalonin'_GitEmSteveDave: I thought it was a 10% discount, wouldn't that be $48.3 Million?

user-pic

@temporaryerror: I learned that from my Ex, who worked at Target, and should have bought a pre-paid phone so I couldn't catch her cheating on me.

user-pic

@danramarch: i'm with you on that one, been using virgin mobile since the day the at&t/cingular monster sent me a letter that they would stop servicing my phone and when that took effect that my prepaid $10 a month minutes would be automatically upgraded to a prepaid $40 a month plan with my new phone purchase.

THAT happened because of their merge.

if i see the same sort of thing here, i'm gonna jump ship for the next best option.

user-pic

Ughhh...this is horrible. I have been a happy Virgin customer for a few years now. I can only imagine how Sprint is going to muck up Virgin now. Cricket here I come!

user-pic

I agree. I love Virgin Mobile. I started using Virgin Mobile after my Verizon account was over. I planned on using them for a few months while I shopped around for some sort of great package deal, but liked them so much I kept using them.

My Virgin Mobile phone was stolen a year or so ago. It took one phone call and 48 hours later I had a new phone at a very reasonable price.

Their customer service is top notch.

I hope Sprint doesn't screw things up. Sadly, I suspect they will, though. All good things must come to an end, though.

user-pic

@FrankieAvalonin'_GitEmSteveDave: Maybe Sprint signed up for a Target card to get 10% off their purchase. That way they didn't have to be all shady and get an employee to make the purchase :)

user-pic

@dbasch:
I wouldn't recommend Cricket. My friends who have Cricket phones constantly complain about service lapses and missed calls.

user-pic

@rootehound:
Sprint is the best of the large carriers, IMO. Give them a chance before you decide they will screw it up.

user-pic

Someone worried about Sprint snapping up a competitor, and that's a fair concern. Myself, I'd love a chance to consider either Sprint or Virgin Mobile at all--no Sprint coverage where I live. I think I'd like one of VM's text-heavy plans--I still don't talk enough to use a postpaid phone account.

I'm currently with Verizon [post-Alltel transition] and I'm not sure I want to stay, despite great coverage and relatively cheap mobile web access. My only alternatives: AT&T's GoPhone, Tracfone/Net10 with very limited net access, or with O2 Wireless with no net at all. T-Mobile or Boost would be options if either had coverage outside of my immediate city limits.

user-pic

Its kinda interesting because didn't Virgin buy Helio as well. Everyone just keeps buying everyone instead of actually working for customers.

Thats what I see from this... Sprint was loosing customers so instead of actually working to get more or keep customers they just bought more customers. I hope Sprint continues to loose customers as I find them the worst of the top 4 carriers.

user-pic

We went with Virgin for a while after our Verizon contract was up. We've decided on a Sprint Family "Everything Plus" plan since the costs are about the same.

user-pic

Now if Sprint would collect all those damn Nextel Ghetto phones and shred them into dust.

BLLLLLEEEEEEEEP!!!!!

user-pic

Virgin should burn in hell. I purchased a prepaid phone for my mom and it turned out to be defective (no big deal, it happens). So I called Virgin. And I met 'Alex' - their automated answering/routing system.

Did you know there is no way to bypass 'Alex'? So after about 20 minutes I finally reached a live person, only to be disconnected while being transferred to the right department. After trying again I was disconnected while on hold (to reach someone at the right department). The third time someone finally rerouted my call and I cancel the service on the spot.

They have great deals but the customer service is the worst.

user-pic

I've used Virgin Mobile for three months, after switching from Verizon. My bill has been cut in half, and although the service area is smaller with Virgin, I still have service in 99% of the areas I travel. I also have had much better customer service with Virgin than Verizon, but then that is a pretty low bar. Hope Sprint doesn't jack up the bill.

user-pic

I am NOT a happy VM customer as they have screwed up my billing several times now. I have 2 phones - one for me and one for Mom that I pay for. Both phones probably cost me $35 for both for 3 months. You cannot beat that.


They've always used Sprint coverage which isn't as good as Verizon but better than the rest.

user-pic

@AgitatedDot: YOU are NOT lying. see my post below.

user-pic

I've been with Virgin for several years and I couldn't be happier with them. I hope the merger doesn't scare me away. Maybe twice in that time there was a billing mistake, but they fixed it with no questions asked each time.
I just noticed the other day that Helio is now Virgin Mobile, I'm considering using their plans/phones for it seems reasonable and I can keep my number. Anyone have a Helio phone/contract?

user-pic

@Saboth: They better not! I just got my first cell phone ever (Net 10) and it's saving me a TON of money as compared to the other plans out there!

Leave my cheapo phone alone!

user-pic

Does anyone know if this is a bid for Sprint to get into the GSM market? Their phones are CDMA, which is a lesser-used technology, as I understand. Perhaps they'll have access to lower priced handsets, or handsets with more pizzazz (the iphone, for example, doesn't come in CDMA version)

user-pic

@HogwartsAlum: no worries, Net10 is Tracfone/América Móvil/Carlos Slim, and nobody can afford to buy him.

[en.wikipedia.org]

user-pic

@LJKelley: though oddly enough these were already Sprint customers since VM was using Sprint's network...

user-pic

@David in Brasil: Virgin Mobile uses Sprint's CDMA network already, and CDMA is probably the most used network in the US - GSM coverage is still pretty poor in rural areas here unless you are near a major highway.

user-pic

@dbasch: uh...duh.... you have like been using SPRINT service the entire time. Oh, heads up, disney uses the sprint network too... just incase sprint buys that up too..dont want you all complaining about nothing. Did you check out Booost which is also owned by Sprint....$50.00 unlimited for everything,....talk...text....internet...and the $50.00 includes taxes. Beat that with another carrier....

user-pic

Oh, (Emily Letilla voice) "never mind"

user-pic

@HogwartsAlum: I avoided Net10 because, as I recall, they had their own locked phones that you had to use. I ended up going with one the the many no-name MVNOs for the AT&T network several years back. It's been amazing so far.

But anyway, when I did my most recent budget update, I calculated how much prepaid is costing me per month (on average) -- about $7. Prepaid is frakkin' great for keeping costs down, and for keeping you from being "that guy (or gal)" who is on the phone every second of the day for no legitimate reason.

user-pic

Sprint should make sure its own house is in order before adding to the chaos. (See: Nextel merger.) Sure, calling their customer service doesn't make me want to commit murder, but I am still tempted by smaller felonies.

user-pic

It seems to me they're missing the root cause of the problem here. The reason the prepaid cell market is burgeoning is because customers are increasingly sick of the ridiculous costs of monthly plans. If Sprint et al. chose instead to make their standard plans less outrageous (No more $30 plans, and 20 cents for a text? Eff you.), then I'm certain that there would be less demand for prepaid plans in the first place.

user-pic

@midwestdesigner: I sold Sprint phones during the beginning of the Nextel merger. I wanted to hurt myself, and others.

Both were branded with the same happy Sprint yellow, and I spent more time trying to convince families that I couldn't get dad a Nextel chirp/ construction worker phone on the same plan as a fancy pretty Sprint phone.

I wonder if Sprint is going to learn from the past and leave the Virgin Mobile name and system alone.

user-pic

@derelk: Except that we're so used to subsidized razzle-dazzle smartphones, who'd want to shell out $500-$700 or more for a phone?

user-pic

@dreams305: Probably not. They're too busy wandering the streets and making empty promises. ;)