Sprint Affiliate Suits Now Totally Behind It (S, IPCS, CLWR)

If you have followed Sprint Nextel Corporation (NYSE:S) since way back when Sprint was Sprint and Nextel was Nextel, you know how the Sprint story is riddled with lawsuits from affiliates and full of acquisitions of its old affiliates.  Today marked the formal closing date of Sprint Nextel’s acquisition of iPCS, Inc. (NASDAQ:IPCS), which is the last acquisition of the old publicly traded  Sprint affiliates.  What is interesting here is that iPCS had been suing Sprint as Sprint had rolled up all the earlier affiliates and over a myriad of terms.  While iPCS had dropped its case against Sprint Nextel as part of the merger agreement, this should effectively remove the possibility that any such potential liability could be there in the future.

Sprint Nextel acquired iPCS for about $831 million, which also includes the assumption of $405 million of net debt, and all the iPCS shares were bought for $24.00 per share in cash.

As Sprint had acquired all of its former public affiliates, we wondered why the company did not acquire iPCS sooner.  It seemed as though there was a case, particularly as the Sprint buyout of Nextel gave it some potential and literal direct competition with those regional affiliates.

This should also formally clear up any of those “new” old issues that had been filed due to Sprints move with Clearwire Corporation (NASDAQ: CLWR).  Again, all suits were dismissed upon the merger being agreed to rather than pending the closure date.  BUt as with all of those cases, this will prevent any of those former suits from ever coming back.

Sprint Nextel will say it acquired the user base and geography.  It noted:

• More than 700,000 former iPCS wireless customers will now be counted as direct Sprint Nextel subscribers. As part of the acquisition, Sprint also expanded its direct service territory to cover an additional 12.6 million people. Since iPCS’s services were sold under the Sprint brand name and in Sprint-branded stores, iPCS customers should not experience any change in their service as a result of this transaction.

The reality, at least by our take, is that Sprint bought out the affiliate suit(s) in this buyout, and got to count more subscribers and a larger geography as a result.  The latter was probably deemed just an added benefit.

Jon C. Ogg