Sprint and Nextel in '$70bn' merger talks

US mobile operators Sprint and Nextel are in preliminary merger talks which could lead to the creation of America's third largest mobile company, according to press reports.

A merger between the two companies could be worth up to $70bn, according to the Financial Times. However, the Wall Street Journal, the original source of the rumour, values the deal at approximately $30bn.

The merged company would have almost 40 million subscribers and would mean the top three US operators would have 75 per cent of the US mobile market. There have been some suggestions the talks could be the start of a major consolidation in the industry.

Just over 170 millions Americans have mobiles and the US operators are gearing up to offer 3G services. This will require a hefty investment to establish a nationwide network and is one of the reasons analysts are predicting an industry consolidation.

Nextel, a pioneer of the 'push-to-talk' mobile, is expected to choose a CDMA-based system for its 3G offering. Sprint currently runs a CDMA-based service.