NEW YORK-Sprint Nextel Corp.’s planned acquisition of its largest CDMA affiliate Alamosa Holdings Inc. revved up investors of fellow affiliate UbiquiTel Inc. The carrier has yet to resolve ongoing litigation with Sprint Nextel. UbiquiTel’s stock price surged more than 10 percent Monday to a new 52-week high of $9.77 per share, and jumped even higher early Tuesday to $9.82 per share, before falling back to $9.55 by mid-day Tuesday.
Analysts noted that UbiquiTel remains the last major CDMA affiliate that has not reached a new agreement with Sprint Nextel over violations of its affiliate arrangement triggered by Sprint Corp.’s acquisition of Nextel Communications Inc. on Aug. 12. Most expect Sprint Nextel will eventually buy UbiquiTel-a move Sprint Nextel has taken with a number of its CDMA affiliates.
UbiquiTel entered into a forbearance agreement with Sprint Nextel in early August that stalled the affiliate’s attempts to seek injunctive or equitable relief from Sprint Nextel in connection with Sprint Corp.’s acquisition of Nextel Communications Inc. UbiquiTel filed a lawsuit against Sprint in July claiming the acquisition would violate terms of UbiquiTel’s affiliate agreement.
As part of the forbearance agreement, Sprint Nextel agreed to not use Nextel’s iDEN network or spectrum, including the G block 1.9 GHz spectrum Nextel is receiving from the Federal Communications Commission as part of its spectrum realignment plan, in UbiquiTel’s service areas to offer CDMA services. Sprint also said it will not offer dual-mode CDMA/iDEN handsets in UbiquiTel’s service areas unless the CDMA portion of the handset is programmed to use UbiquiTel’s network on a first-priority basis rather than using the iDEN network in its service areas.
The agreement also includes several provisions designed to protect UbiquiTel’s CDMA customer base from competing iDEN services that will be offered by Sprint Nextel in UbiquiTel’s service area. The terms include promotional material, billing and subscriber records, customer-care and migration services, and network performance reports.
Sprint Nextel signed a similar agreement with affiliate Shenandoah Telecommunications Co.
Sprint Nextel is also in the midst of an appraisal process to determine a fair market value for the purchase of iDEN affiliate Nextel Partners Inc. The process is expected to be completed by early February.
