US Unwired files for injunction to stop Sprint Nextel deal

[ComicalMoodyDan]

US Unwired files for injunction to stop Sprint Nextel deal
By Dan Meyer
Jun 24, 2005

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.

US Unwired files for injunction to stop Sprint Nextel deal

[larry]

Interesting but I'm sure they will come to an agreement out of court on this. Do they really think they can stop this merger?

[Fullstrength]

They should convert to GSM-UMTS, and say goodbye to sprint. I dont think they will win this, and at least with GSM they could be a good takeover target from tmobile, or Cingular.

[larry]

I don't think they are allowed to convert to GSM as part of their agreement with Sprint. Also they would have to have each of their customers buy a new phone which is never a good situation.

[Mobile Mike]

It seem like there is always some last ditch attempt by some company to try and halt a merger of this magnitude. I doubt whether US Unwired will really succeed in its efforts, especially this late in the game.

[jones]

It is being challenge By Affiliates from Both Sides

Sprint-Nextel $35 billion deal challenged
Unhappy affiliates ask to be bought, seek end to merger

The Associated Press
Updated: 4:40 p.m. ET June 24, 2005


KANSAS CITY, Mo. - Affiliates on both sides of the potential $35 billion merger of Sprint Corp. and Nextel Communications Inc. are causing their parent companies headaches.

Nextel Partners Inc., which sells Nextel-branded services in 31 states, said Thursday a special committee of the company's board recommended shareholders vote in favor of exercising a "put right" which would force Sprint-Nextel to buy the company after the merger.

Another affiliate, U.S. Unwired Inc. of Lake Charles, La., has asked a federal judge to halt the merger, saying it will violate the company's contract with Sprint to exclusive sales rights in parts of the South.

Sprint and Nextel officials declined to comment on the Nextel Partners issue and said they will "vigorously" defend against the U.S. Unwired suit.

The role of the affiliates under a merged Sprint-Nextel has been a big question mark since the deal was announced in December. Officials have said they would deal with the matter after the merger is completed later this year.

But the affiliates are pushing the issue.

Nextel Partners, based in Kirkland, Wash., filed paperwork with the Securities and Exchange Commission providing for a special shareholder meeting to vote on the put right. The company's chairman, chief executive and president, John Chapple, said in a memo that voting for the put right "is the right decision given all the factors involved."

Partners spokeswoman Susan Johnston said it was too early to speculate how much the company would be worth, but shares not owned by Nextel currently are valued at $4.8 billion.

The stock of Nextel Partners broke through its 52-week high on Thursday and rose another 33 cents, or 1.3 percent, to $26.50 in Friday afternoon trading on the Nasdaq Stock Exchange.

In Louisiana, U.S. Unwired, which sells Sprint-branded services in six southern states, filed for an injunction this week in the U.S. District Court of Western Louisiana to stop the merger.

U.S. Unwired and Overland Park, Kan.-based Sprint already are in court over the affiliate's claims that Sprint is trying to drive it out of business.

The latest lawsuit claims the merger would allow Sprint to take over Nextel affiliates that now compete with U.S. Unwired in nine of its 11 territories. That, U.S. Unwired claims, violates its contract with Sprint guaranteeing it exclusive rights to sell Sprint services in its regions.

Sprint and Nextel shareholders are scheduled to vote on the proposed merger on July 13. U.S. Unwired wants a judge to delay the consummation of the merger until the deal is rewritten to exclude Nextel affiliates that compete with U.S. Unwired.

Meanwhile Thursday, Sprint and Nextel said Sprint will remain the lead brand name if the companies successfully merge later this year.

Nextel, which enjoys intense loyalty among its business customers, will remain a "key product brand," the companies said.

Nextel's yellow-and-black color scheme will take over the unified brand's logo, which will feature the Sprint name and a stylizing dropping pin _ a nod toward Sprint's 1990s-era advertising campaign that emphasized the company's network's call clarity.

Officials said the choice of Sprint as the lead name followed discussions with research firms, employees and customers which determined that Sprint had more widespread recognition.

Telecommunication experts said the move made sense as Nextel is considered more of a favorite for businesses wedded to its press-to-talk reliability. Sprint, on the other hand, is trying to attract more customers interested in wireless Internet and download services.

"Sprint is definitely one of the companies father down the path of getting customers into data and mobile entertainment," said Jupiter Research analyst Julie Ask. "Nextel just had more of a niche market than Sprint does. It's a question of broader appeal."

Officials for the two companies haven't said how the merger will affect their separate networks of retail stores and mall kiosks and didn't say Wednesday how much the switch could ultimately cost.

© 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
© 2005 MSNBC.com

URL: http://www.msnbc.msn.com/id/8348032/

[Mobile Mike]

Sounds like this might turn into a drama that could rival the MCI/Verizon/Qwest soap opera of a month or so ago...

[jrip]

Originally Posted by lbmike212

Sounds like this might turn into a drama that could rival the MCI/Verizon/Qwest soap opera of a month or so ago...

NAH..wont get far. Sprint also has a buy-out clause with each of its affiliates. And Sprints affiliates will cost less than Nextels. Fair market value minus debt. Lets see thats 80% of assets, subtract debt, and wow thats really cheap. Hell of a deal if you ask me!

[Chris L]

Times like these make me happy I'm moving out of affiliate territory...

[AnthroMatt]

I agree with others that think this is more about the money. I doubt they want to stop the merger, they just want to get a little bigger chunk of change than they might under "normal" circumstances. If Sprint (and Nextel) settle out of court they might get more favorable terms than if the contracts were simply bought out.

[Etorres777]

I think Sprint would do so much better without their affliates. Here in El Paso they have their affiliate, Alamosa, which really really sucks. They're horrible and rude. More people from Sprint port to T-Mobile than anyother company. About 75% are from Sprint. They also complain that Sprint has horrible customer service. That's what the customers say, but I did call Sprint for my cousin and I didn't really like the rep very much.. Plus, even we, just an exclusive dealer, look so much more professional than the Sprint Express Store booth. They have food on the booth, eating, they don't even dress proffesional, this girl has a huge tattoo above her chest and she's showing it off...

[WirelessBeachBum]

Alamosa recently took over airgate as well...it's going to be a fun ride for the affiliates. In my market I have Sprint (Alamosa/Airgate) and Nextel Corporate.

[wafrenkel]

So what does this mean? Sprint will have sim cards and will be gsm... meaning if i have tmobile i can roam onto there network... what is the diffrence between IDEN and GSM?
Please PM me
thanks in advance!

[jrip]

Originally Posted by wafrenkel

So what does this mean? Sprint will have sim cards and will be gsm... meaning if i have tmobile i can roam onto there network... what is the diffrence between IDEN and GSM?
Please PM me
thanks in advance!

Basically opposite sides of the same coin. As of right now there will be no roaming between the two. But Qualcomm has new chips that do provide for roaming capabilities on every type of network from the same handset. How long before we see these is anybodys guess.

[wafrenkel]

Ok thats fine with me, What do you mean no roaming though? is it that there will be so much coverage that they dont need to roam? or that they cant sign any agreements

[Mobile Mike]

Originally Posted by wafrenkel

Ok thats fine with me, What do you mean no roaming though? is it that there will be so much coverage that they dont need to roam? or that they cant sign any agreements

Incompatible types of networks. T-Mobile being GSM, Sprint being CDMA, and Nextel being i-Den. As a previous post mentioned, until the day comes that handsets have the ability to interact with these networks together, there will not be T-Mobile roaming on Sprint/Nextel, or vice versa. So coverage and agreements have no bearing on roaming between these carriers at the moment.

[bobolito]

Originally Posted by larry

I don't think they are allowed to convert to GSM as part of their agreement with Sprint. Also they would have to have each of their customers buy a new phone which is never a good situation.

Couldn't they just get out of the affiliate agreement? In that case, they could just convert to GSM/UMTS. Therefore, it wouldn't be the first time a carrier asks customers to change phones. However, I see this as their last resort and an unlikely event.

The most likely events I see here are, either Sprint buys out US Unwired to shut them up! ....or Sprint/Nextel may willingly (as a settlement) divest those areas in question....or the FCC will require them to do so as an approval condition.

AT&T Wireless was in the same exact situation with their affiliate agreement with Suncom which had to be dissolved prior to the Cingular acquisition. As a result, they exchanged/divested some licenses and networks.

[jrip]

Originally Posted by bobolito

Couldn't they just get out of the affiliate agreement? In that case, they could just convert to GSM/UMTS. Therefore, it wouldn't be the first time a carrier asks customers to change phones. However, I see this as their last resort and an unlikely event.

The most likely events I see here are, either Sprint buys out US Unwired to shut them up! ....or Sprint/Nextel may willingly (as a settlement) divest those areas in question....or the FCC will require them to do so as an approval condition.

AT&T Wireless was in the same exact situation with their affiliate agreement with Suncom which had to be dissolved prior to the Cingular acquisition. As a result, they exchanged/divested some licenses and networks.

I do believe that situation was more of a situation where Cingular would have held too much spectrum in those markets. Too much market share. The whole no monopoly thing. I may be wrong but this was my understanding.

[Chris L]

Originally Posted by bobolito

Couldn't they just get out of the affiliate agreement? In that case, they could just convert to GSM/UMTS. Therefore, it wouldn't be the first time a carrier asks customers to change phones. However, I see this as their last resort and an unlikely event.

US Unwired, at least, doesn't own the licenses for its territory--Sprint does. Unwired is in no financial condition to obtain licenses. Without some sort of agreement with Sprint they would cease to be able to operate.

The most likely events I see here are, either Sprint buys out US Unwired to shut them up! ....or Sprint/Nextel may willingly (as a settlement) divest those areas in question....or the FCC will require them to do so as an approval condition.

I could see Sprint Nextel possibly divesting the rights to the overlapping Nextel territories (many of which are actually Partners territories, so their buyout would have to be resolved first) to the affiliates, but I don't see how any of the affiliates could afford that either--S-N isn't going to give the overlapping Nextel territories away. Maybe some of the stronger affiliates could afford to buy, but I don't think Unwired could.

Alternatively, S-N could spin off the overlapping Nextel territories as separate affiliates providing just iDEN service... but who'd want to invest in a business that will disappear in five years anyway?

I think a buyout is the most likely alternative, especially considering that the affiliates are massively behind corporate in tower build-out; Unwired is probably just waiting for Sprint to say the right number (and trying to force that number up by making the litigation more of a drain on Sprint's resources).

Incidentally, Unwired's original lawsuits against Sprint (and the countersuits) are currently in federal district court in Louisiana; we'll see what happens with those in a few weeks.

[bobolito]

Yes, part of it was concern the FCC/DOJ would ask them to divest more than what they wanted in those areas, but also the Suncom exchange was very favorable for Cingular since it gave them licenses in much of VA where neither AT&T nor Cingular had barely any licenses.