Sprint Nextel reported today that it has agreed to acquire Virgin Mobile USA for $483 million in stock. The deal will boost the company's prepaid cell phone services.

Sprint has also agreed to pay off Virgin Mobile's outstanding debt of about $205 million due at the end of September. 

Sprint Nextel, the nation's third-largest carrier, with over 49 million customers, behind Verizon Wireless and AT&T Mobility, has suffered recently with customer losses in its main subscription-based cell phone business. Sprint is a global Internet carrier (Tier 1 network) and makes up a portion of the Internet backbone. In the United States, the company also operates the largest wireless broadband network and is the third largest long distance provider.

Sprint was also losing customers in its iDen service which it acquired as part of the 2005 merger between Sprint and Nextel. Since the merger, the company has brought in new executives and tried to reverse its reputation for poor customer service.

Congress and the Federal Communications Commission have launched reviews of competition in the wireless industry. Consumer groups and smaller carriers have argued that the industry has consolidated with the nation's four biggest carriers -- Verizon Wireless, AT&T, Sprint Nextel and T-Mobile -- serving nine out of 10 cell phone users.

In the current economic downturn, the company has grown in its prepaid cell phone service, Boost, which doesn't force customers to sign long-term contracts.

Sprint chief executive Dan Hesse said that "The acquisition of Virgin Mobile USA positions Sprint for even greater success in the prepaid wireless segment," he added that "Prepaid is growing at an unprecedented rate with consumers keenly focused on value. Virgin Mobile is an iconic brand in the marketplace that will complement our Boost Mobile brand."

Sprint Nextel Corporation is a telecommunications company, based in Overland Park, Kansas. The company was created in 2005 by the $35 billion purchase of Nextel Communications by Sprint Corporation. In 2006, the company spun off its local landline telephone business. The company also completed the $6.5 billion acquisition of Nextel Partners, one of its largest affiliates, which primarily provides Nextel wireless services to more rural markets.

Sprint also operates and maintains DCSNet, the U.S. Federal Government's private surveillance network.

Sprint Nextel Corporation is at $4.44 down 11 cents or 2.4% at noon today.