NEW YORK, Dec. 15 -- Sprint Corp. and Nextel Communications Inc. on Wednesday formally announced a $35 billion merger agreement, offering fresh details on how the corporate combination creating the nation's third-largest wireless company would affect employees and consumers.
The companies said consumers would be able to keep their existing phones and service plans. Both companies' networks would be maintained for at least the next few years, with some rapid upgrades to make communications between them quicker and easier. In two or three years, the merged firm plans to offer a single handset on a single network that would combine Nextel's popular push-to-talk function with high-speed wireless connections to the Internet.
Executives at both companies said the merger would result in layoffs -- including some among Nextel's 3,500 employees in the Washington area and Sprint's 1,600 employees in the area -- to achieve a promised $12 billion in cost cuts. The companies predicted the merger, which requires shareholder and regulatory approval, would close in the second half of next year.
The new company, to be named Sprint Nextel, would have its executive headquarters in Reston, where Nextel is currently based, and its operations center in Sprint's hometown, Overland Park, Kan. Sprint chief executive Gary D. Forsee is to move to Reston and serve as chief executive of the merged firm. Nextel chief executive Timothy M. Donahue will serve as executive chairman.
During a news conference announcing the deal, Donahue said Forsee would "lead the charge" at the new company. In an interview, Donahue said he had committed to remain for only three years as chairman of the company and would focus on broad strategic direction.
Forsee's apparent emergence as the leading force at the merged company generated concern among some analysts that Nextel's brash, entrepreneurial style would eventually disappear in the new firm, but Donahue insists it will survive.
Forsee and Donahue said the merger would allow the combined company, with its 40 million customers, to better compete with the two biggest cell phone providers, Cingular Wireless LLC and Verizon Wireless.
Nextel has about 18,000 employees. Sprint has about 60,000 workers. Forsee said there could be duplication among the two companies' retail operations, network technicians and administrative staffs. But Forsee and Donahue said the company would not ask thousands of employees to relocate between Virginia and Kansas.
Analysts said the job cuts could be substantial.
"My guess is that it would be more like thousands. You've got two pretty big companies and some duplicate functions, like accounting, that could be reduced," said Gregory J. Teets, an analyst with A.G. Edwards & Sons Inc. But, Teets added, some of the employees could be offered positions with Sprint's local phone division, which is to be spun off into a separate company.