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Summary:

Away from the hubbub of the blogs and general fascination with the new Disney MVNO, there is some legal trouble brewing that could possibly derail the Sprint-Nextel union, or at the very least put an economic crimp in their future plans. Nextel has been sued by […]

Away from the hubbub of the blogs and general fascination with the new Disney MVNO, there is some legal trouble brewing that could possibly derail the Sprint-Nextel union, or at the very least put an economic crimp in their future plans. Nextel has been sued by Nextel Partners, while Sprint has been taken to court by US Unwired. Both the affiliate companies are looking to make trouble for their bigger siblings, threatening to drag them through the mud. The situation is very much like the improbable scenarios you encounter on day time soaps like The Bold & The Beautiful. This could seriously delay the merger, cause problems, and there is a good chance add a financial premium to the deal which might make the whole “merged” entity a tad tenuous in fiscal terms. Keep an eye on this one.

Here is the back story: On June 21st, US Unwired, the Lousiana-based Sprint affiliate that sells service in parts of Texas, Alabama, Mississippi and Tennessee filed an injunction acusing Sprint of heavy handed tactics. There are 11 such affiliates and they account for 3.4 million of total 26 million Sprint subscribers. US Unwired thinks Sprint is low balling them and paying discounted price for their subscriber base. US Unwired is the only one suing Sprint and basically wants courts to bust up the deal between Sprint and Nextel. “This is like starting a fight by using the ‘Nuclear Option'” said Victor Schnee, President of Probe Financial Associates, Inc. “US Unwired believes they have leverage over Sprint because of contractual ‘exclusivity’ terms, but even if they are correct, an injunction is an extreme move, signaling a total hardball fight is ahead.”

On the Nextel side of things, Nextel Partners which uses Nextel brand name and has 1.7 million customers is looking for a clarification. It is saying that Nextel, is treating the company like a poor cousin and is being left out of the whole branding process. NP wants to exercise a “put” option that will force Nextel-Sprint to buy out Nextel Partners for $5 billion. Buy us for mucho dinero or else. And you thought John Gotti was dead.

  1. Jesse Kopelman Friday, July 8, 2005

    Eh. Suncom and others made a similar stink over AWS+Cingular and it amounted to nothing.

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  2. [...] l musings Archive by Date Sprint to Buy US Unwired for $1.3 Billion As I said earlier, the affiliates could put a financial crimp on [...]

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