Citing a violation of its affiliate agreement, Sprint Corp.’s disgruntled network partner US Unwired Inc. has filed for an injunction that would prevent Sprint from acquiring Nextel Communications Inc.
US Unwired said the pending acquisition, which is expected to close during the third quarter, would “irreparably harm” the affiliate and violate portions of its 1998 affiliate agreement that prevents Sprint from offering a competitive service in any of US Unwired’s 11 service areas. US Unwired claims that with the acquisition of Nextel, the new Sprint would have operations in nine of US Unwired’s service areas.
“Once Sprint has acquired Nextel and operates Nextel’s network in competition with US Unwired, US Unwired will suffer the intolerable fate of having its ongoing business fortunes subject to the whims of a competitor,” the Sprint affiliate said in its court filing. “US Unwired will face huge obstacles in maintaining its market share and its goodwill, jeopardizing the entire value of more than $600 million it has invested in its network.”
US Unwired said it currently serves more than 500,000 Sprint customers in its Southeast service areas.
Sprint said earlier this month that it was in negotiations with each of its affiliates in regard to the pending acquisition of Nextel.
US Unwired’s troubles with Sprint also include an ongoing legal battle initiated in 2003. US Unwired claims that Sprint forced the carrier to turn over nearly all of its back-office services to Sprint, and that Sprint delayed payments and access to advanced services to US Unwired.
Unlike most of Sprint’s other affiliates, US Unwired operated its own rural cellular network and even began building its own PCS network prior to reaching an affiliate agreement with Sprint. US Unwired, which has since sold its cellular operations to Cingular Wireless L.L.C., noted it had the capabilities to perform most of its own back-office procedures.
Sprint has already settled similar legal complaints filed by other Sprint affiliates.
