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The Association of U S West Retirees
 

 

 

Sprint Nextel told to divest in Midwest
By Andrew Harris
AP
Wednesday, August 16, 2006

Sprint Nextel Corp., the nation's third-biggest mobile phone service provider, must divest its Nextel operations in Illinois, Michigan, Iowa and parts of Nebraska, an Illinois judge ruled after a 25-day trial.

Cook County Circuit Judge Thomas Quinn in Chicago found last year's Nextel-Sprint merger violated Sprint's exclusive management agreement with iPCS Inc., the Sprint affiliate serving the states affected by his ruling.

''Sprint agreed not to 'own, operate, build or manage another wireless mobility communications network' in the service area,'' Quinn said.  ''Through its acquisition of Nextel it now owns, operates and manages a competing network.''  He gave Sprint until Sept. 6 to file a divestiture plan with the court.

Sprint Nextel, formed last year in a $36 billion deal, reported $34.7 billion in 2005 sales. Schaumburg-based iPCS had $280 million in sales last year and a $50.9 million net loss.  On Aug. 4, a Delaware judge ruled that Sprint Nextel could not use its brands and trademarks in territory controlled by two iPCS affiliates there.

''We are planning to pursue an appeal vigorously,'' Sprint Nextel spokeswoman Jennifer Walsh said of the Chicago ruling.

In the Delaware case, iPCS affiliates Horizon Personal Communications Inc., and Bright Personal Communications Services LLC dropped their claim that Sprint Nextel's use of Nextel's products violated exclusivity agreements after they had spent about $300 million to expand Sprint's network.

In contrast, Quinn's Chicago decision said, ''plaintiff would never have spent over $300 million in construction costs unless it was assured that there would be no competition from defendants in the service area.''

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