Sprint Again Hauled to Court By iPCS

Sprint Nextel Corp. (S) is facing legal trouble over its pending purchase of MVNO Virgin Mobile USA, and it’s no wonder – it appears the struggling wireless provider is, again, trying to compete against one of its largest affiliates.

iPCS filed suit last week in Illinois, asking a judge to block the $483 million deal because it would violate a non-compete agreement. iPCS sells Sprint-branded products and services throughout the Midwest and said in its lawsuit “this is now the third time in four years that Sprint has attempted to unlawfully compete against and cannibalize its own affiliates.”

A Sprint spokesman told the Associated Press the claims “are without merit.”

This isn’t the first time iPCS has taken Sprint to court. It did the same thing when Sprint bought Nextel and a judge sided with iPCS; the court ruled Sprint had to stop operating the Nextel network in iPCS’ territories because the competition was a violation of Sprint’s exclusivity agreement with iPCS.

iPCS also hauled Sprint to court last year over a similar deal with WiMAX provider Clearwire Corp. The case remains in the judicial system.

Sprint has faced several of these lawsuits in the past and, except for iPCS, ended up buying the unhappy affiliates. There’s no word on whether Sprint will try to take over iPCS as well.

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