Not content with its stranglehold on the business market for wireless services, Nextel Communications ( NXTL) plans to go after teens. It's a market largely out of Nextel's area of expertise, and perhaps fearing company spokesman Dennis Franz's take-no-prisoners image would not play well to teens, Nextel tapped Australian mobile operator Boost to engage in a venture to launch a separate brand, Boost Mobile, to the U.S. market. Some details of the venture were revealed Wednesday night in an SEC filing, but financial terms were not disclosed. A conference call is scheduled for Thursday afternoon. Nextel said it plans to launch the prepaid service for the youth market in California and Nevada by September, and did not indicate timing for a national rollout. The news comes just a day after Nextel announced it had pared down its debt by $733 million, in exchange for 33 million common shares and $205 million in cash. It also revealed Thursday in SEC filings that it is purchasing mobile radio operator NeoWorld Communications for a combination of stock and cash worth between $263 million to $273 million, giving it licenses in the 900-megahertz spectrum in major markets including New York and Los Angeles. "Boost Mobile will offer the first true youth brand in the wireless market in the United States," said Tom Kelly, Nextel's executive vice president and chief marketing officer, in a prepared statement. "We chose to go after this customer segment with the Boost Mobile leadership team because of their unparalleled expertise in developing wireless offerings that are uniquely suited to the lifestyle and behaviors of young people."
In the heat of the news, perhaps Kelly forgot about his competitors. Although rare on these shores, the deal with Boost Mobile is fashioned on the virtual network operator model and is similar to a joint venture Sprint PCS ( PCS) and Virgin Mobile launched earlier this summer to go after the teen market. Both partners ponied up around $150 million each, with Sprint contributing network assets and Virgin contributing cash. Virgin mobile also recently struck a marketing relationship with Viacom ( VIA)-owned MTV Networks. France Telecom ( FTE)-owned wireless carrier Orange mulled a similar strategy earlier this spring, but scaled back those ambitions as the telecom and wireless markets crumbled. Orange has offices in the U.S. in Cambridge, Mass., largely devoted to research and development.