Sprint Faces Challenges In Wake Of Closing Virgin Mobile USA Acquisition

Virgin Mobile USA

Sprint (NYSE: S) Nextel has closed the $483 million acquisition of Virgin Mobile USA (NYSE: VM), after shareholders voted in favor of the deal today.

But now comes the hard part. Analysts see the company’s struggling with two challenges: competing with the other low-end service providers that have continually dropped their prices since the acquisition was announced in July, and managing a growing number of consumer brands. Beyond the flagship Sprint brand, the company juggles the Nextel brand, Boost Mobile, its other pre-paid brand, and now Virgin Mobile, too. Daniel Hays, a director at management consulting firm PRTM, told *Dow Jones* Newswires: “It’s definitely going to be a challenge for them to manage the individual identities of the different brands.”

It’s too early to say how Sprint will differentiate its two pre-paid products, which will likely be the responsibility of Virgin Mobile’s CEO Dan Schulman, who will oversee the pre-paid business, including Virgin and Boost. Together, the two companies, which control just under one-third of the U.S. pre-paid market, can probably combine corporate functions and get better phone deals because of their size.

Atlantic-ACM analyst Fedor Smith said there still is a large opportunity in stealing away customers from the big four national carriers: “It’s more about keeping ahead of post-paid than picking each other off,” Smith said.

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