Sprint Nextel Corp. CDMA affiliate iPCS Inc. has claimed victory in a lawsuit that could force Sprint Nextel to divest its iDEN operations in the affiliate’s territory. Sprint Corp. took control of the iDEN network when it acquired Nextel Communications Inc. last year.
iPCS operates in rural Illinois, Michigan, Iowa and Nebraska, and filed suit against Sprint Nextel in the Circuit Court of Cook County, Illinois.
Judge Thomas Quinn of the Cook County court ruled that iPCS never would have spent over $300 million to build out a CDMA network if the affiliate thought that it would have to compete with its parent company in any way. Further, the judge said Sprint Nextel’s past presentations to its investors and affiliates had indicated that the affiliates would have access to all the spectrum available to Sprint Nextel, not just its holdings in the 1900 MHz band.
According to the court filing, Thomas Mateer of Sprint Nextel also “testified that Sprint did not expect to compete with the affiliates when it entered into the (affiliate) management agreements, and that the acquisition of Nextel means that Sprint is now competing with the affiliates.”
However, the judge noted that iPCS’ demands that Sprint Nextel not be allowed to operate, manage or market its Nextel and Boost brands in iPCS’ territory would “place the court in a position where it would be required to continuously supervise the operations of a multi-billion dollar corporation.”
So the court opted instead to require Sprint Nextel to produce plans for divesting the iDEN network within iPCS’ territory.
According to the court filing, “Steven Nielsen, chief transition officer for Sprint, testified that although divestiture would be very `detrimental,’ it is possible.”
The court decision stands in opposition to a ruling last week from the Chancery Court in Delaware, where iPCS subsidiaries Horizon and Bright Communications had filed suit along with former Sprint Nextel CDMA affiliate UbiquiTel Inc. UbiquiTel’s suit ended when the company was acquired by Sprint Nextel in 2005.
The judge in the Delaware case ruled that Sprint Nextel had the right to operate the iDEN network within the affiliates’ territory, but could not sell CDMA products in its legacy Nextel stores and had to rebrand the stores in a manner distinct from the affiliates’ Sprint-branded stores.
Sprint Nextel spokesman David Gunasegaram said iPCS’ victory in Cook County “is directly contradictory to the decision in Delaware.” He added: “We plan to pursue an appeal vigorously for the case.”
