Sprint Nextel bought Virgin Mobile USA

Sprint Nextel, the third-largest US mobile network operator, unveiled a $420m deal on Tuesday to acquire Virgin Mobile USA, the wireless phone company in which Sir Richard Branson’s Virgin Group is the largest shareholder.

The all-stock deal valued Virgin Mobile USA’s equity at $5.50 per share, representing a 31 per cent premium to its closing price on Monday.

The transaction represents a further retreat from the mobile phone market for Sir Richard’s Virgin group. Virgin began establishing mobile businesses in the 1990s but since 2006 it has sold equity stakes in Australia, the UK and Canada. It is focusing on its mobile operations in India, France and South Africa.

Sprint has been struggling to stem customer defections from its core post-paid mobile business following a disastrous $36bn merger with Nextel in 2005.