Sprint Nextel Corp. Chief Executive Dan Hesse often refers to “doubling down” on the pre-paid market when he talks about the company’s pending purchase of Virgin Mobile USA Inc .
The deal, expected to close Tuesday, remains a risky gamble because it increases the wireless carrier’s exposure to the fast-growing–but increasingly competitive–segment.
The Sprint-Virgin Mobile deal tops off a year in which pre-paid wireless service hit mainstream, with budget-conscious consumers seeking lower-priced plans and shunning long-term contracts. Sprint, prompted by the success of its own pre-paid arm, Boost Mobile, decided to follow the growth. But since the deal was announced in July, things have changed. Rival low-end service providers and new entrants have continually one-upped each other with cheaper offerings and more features, making it more difficult to stand out from the pack.
