In a key development involving regional service providers in the Mid-Atlantic States, Shenandoah Telecommunications (Shentel) announced plans on Monday to acquire fellow Sprint affiliate nTelos Holdings Corp. in a cash and stock deal valued at $640 million. At the same time, Shentel confirmed an expansion of its existing affiliate agreement with Sprint which, when combined with the nTelos merger, is expected to catapult Shentel to the echelon of the six largest providers of mobile wireless services in the U.S.

Through its affiliation pact with Sprint, Shentel currently offers wireless telecommunications services in portions of Virginia, West Virginia, Maryland and Pennsylvania, and the nTelos acquisition is expected to boost Shentel’s wireless subscriber count beyond the one million mark with the addition of 298,000 retail subscribers throughout these states as well as in North Carolina, Ohio and Kentucky. As stated by nTelos chairman Michael Huber, the deal advances nTelos’ strategy of exiting eastern U.S. markets “that have become increasingly competitive” in favor of focusing on western markets “where we benefit from a strong branded retail presence and access to multiband spectrum” in territories covered by his company’s affiliation agreement with Sprint.

nTelos stockholders will receive a cash payment of $9.25 for each of their shares, which, according to Shentel executives, represents a 60% premium over the nTelos average share price over the past 30 days. In addition to assuming $431 million in nTelos debt, Shentel has also pledged to invest more than $300 million to “continue and accelerate” fourthgeneration LTE upgrades to the nTelos network. Sprint, meanwhile, will gain access to nTelos spectrum assets which cover a population of 5.4 million, pursuant to the amended affiliation agreement with Shentel. The amended agreement also extends Shentel’s affiliate relationship with Sprint for an additional five years while providing Sprint with $252 million over the next five to six years through a reduction in Sprint’s retained revenues under that agreement.

As Sprint senior vice president Michael Schwartz lauded the amended agreement as one that enables his company to “grow its customer base, improve its financial performance, acquire spectrum in important markets, and improve and expand LTE coverage,” Shentel CEO Christopher French declared that the transactions “significantly [expand] the scope of our wireless business” and position Shentel as “the leading provider of Sprint PCS-branded wireless communications services in the Mid-Atlantic region.” Contingent upon receipt of FCC and other required approvals, the parties expect to complete the transactions early next year.