iPCS sues Sprint over Virgin deal

15 Sep 2009

Sprint Nextel affiliate iPCS has opened proceedings in an Illinois court to block the mobile operator’s proposed takeover of Virgin Mobile USA, according to a report by the Associated Press. Three subsidiaries of Schaumburg-based iPCS filed the lawsuit last week in the Circuit Court of Cook County, seeking an injunction to stop the USD483 million deal, claiming it would violate an agreement by Sprint not to compete against iPCS within its territories. Representatives for iPCS, which resells Sprint products and services in parts of the Midwest, said: ‘This is now the third time in four years that Sprint has attempted to unlawfully compete against and cannibalize its own affiliates.’ iPCS has taken Sprint to court over the exclusivity agreement before; following Sprint’s merger with Nextel in 2005 and also over last year’s deal with Clearwire, which saw the two companies merge their WiMAX networks. A Cook County judge agreed with iPCS on the Nextel deal, ordering Sprint to cease operating its Nextel network in the firm’s markets, while the Clearwire case is still pending. Several Sprint affiliates sued shortly before and after the Nextel purchase, leading the company to acquire the majority of them; Sprint has not indicated whether it may consider similar plans to acquire iPCS.

Sprint itself is currently the subject of takeover speculation, with T-Mobile USA parent company Deutsche Telekom rumoured to be interested in the carrier. Reports by FT.com today, however, suggest that a bid is unlikely. The financial daily reports, citing sources close to the German firm and its major shareholders, that it is not preparing to make an offer for Sprint, which has a market capitalisation of USD12bn and net debt of USD16.4bn.