Sprint affiliate sues over Virgin deal
KANSAS CITY, Mo. (AP) – Sprint Nextel Corp. affiliate iPCS Inc. is asking an Illinois court to block the wireless provider's planned acquisition of Virgin Mobile USA Inc., while Deutsche Telekom has called in banking advisers to study a possible multi-billion-dollar bid for Sprint.
Three subsidiaries of Schaumburg, Ill.-based iPCS filed the lawsuit last week in the Circuit Court of Cook County, seeking an injunction to stop the $483 million deal. They claim it would violate an agreement by Sprint not to compete against iPCS within its territories.
iPCS sells Sprint-branded products and services within a swath of the Midwest.
"This is now the third time in four years that Sprint has attempted to unlawfully compete against and cannibalize its own affiliates," the lawsuit states.
Matt Sullivan, a spokesman for Overland Park, Kan.-based Sprint, said the company was fighting the lawsuit. "We think the claims are without merit," he said.
Sprint and iPCS have battled in the courts before over Sprint's 2005 acquisition of Nextel Communications Inc. and last year's deal with Clearwire Corp. to provide high-speed wireless Internet services – also under the claim that they violated the exclusivity agreement.
A Cook County judge agreed with iPCS on the Nextel deal, ordering Sprint to cease operating its Nextel network in iPCS' markets. Sprint announced in June that it planned to turn over ownership and operation of its Nextel-branded network in parts of Illinois, Iowa, Michigan and Nebraska.
Several Sprint affiliates sued shortly before and after the Nextel purchase, leading the company to buy most of them. The company hasn't said whether it plans to acquire iPCS.
The lawsuit regarding the Clearwire deal is still pending. Sprint merged its WiMAX network with Kirkland, Wash.-based Clearwire last fall.
IPCS has since amended that suit to allege that Sprint is providing "advanced technologies" to Clearwire in violation of its affiliation agreement and will seek damages.