Sprint, Nextel shareholders OK merger

At their annual meetings yesterday, Sprint and Nextel Communications shareholders overwhelmingly threw their support behind the two companies pending acquisition. At least 96% of Sprint shareholders backed their companies $36 billion acquisition plan, while Nextel’s shareholders supported the deal with 99.8% of the vote.

While both groups of shareholders were expected to back the deal, the official votes now clear one of the final hurdles to the pending deal, which would create the country’s third mega-carrier behind Cingular and Verizon Wireless. The companies must still get approval from the FCC and the U.S. Justice Department as well as from the state regulators where Sprint’s ILEC arm holds local franchises. But to offset any concern on that front, Sprint is proposing to spin off its local business into a separate wireline company, which would be the largest non-RBOC local provider with 7.6 million access lines.

“The Sprint and Nextel merger is a bold move that will allow the new company to play a winning hand,” Chairman and CEO Gary Forsee said in his address to the shareholders. “Together, we will be a well-positioned communications company, with unmatched wireless capabilities and a global IP network.”

Forsee said that talks between himself, regulators and his Nextel counterpart Tim Donahue have gone well and the company is not expecting any major problems to interfere with proposed third-quarter timeline for closing the deal.

“I am very pleased with our current status with the appropriate regulatory bodies,” Forsee said. “The Federal Communications Commission and Department of Justice approval process is on track, and we expect to complete the merger in the third quarter of this year.”

Despite the two companies’ good cheer, Sprint has been having trouble with its affiliates since it announced the acquisition. On Monday it settled a dispute with US Unwired, which was seeking to block the acquisition because of its exclusive deal over Sprint’s brand in markets where Nextel has service. Sprint got US Unwired to withdraw its injunction request by buying the southern operator for $1.3 billion. Today, however, another affiliate, Ubiquitel, filed suit claiming the merger would violate its own exclusivity agreements with Sprint. But Ubiquitel is not seeking to block the deal, like US Wireless attempted.