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Sprint Quashes iPCS Outrage With Takeover

Happens every time. A Sprint Nextel Corp. (S) affiliate gets ticked over some business move by Sprint, so it sues Sprint and Sprint ends up buying said affiliate.

Northern PCS a couple of years ago is just one example; now, today, Sprint said it’s purchasing iPCS Inc. (IPCS), the giant reseller that’s raised a legal stink over the pending Sprint-Virgin Mobile transaction. Sprint will pay $426 million and assume $405 million in debt, for a total of $831 million.

iPCS also sued Sprint last year over Clearwire Corp.; that case remains in the court system.

Buying iPCS means Sprint won’t have to divest assets in iPCS territory, something it had planned to do even before announcing the Virgin Mobile buyout. But when that deal materialized, iPCS grew outraged over unfair competition in its regions, from the very provider that supplies its devices and network coverage. On Monday, the company said the agreement with Sprint was the best decision.

“Given the increasingly competitive landscape, we believe this is an opportune time to provide our shareholders with a liquidity event at a very attractive price,” Timothy Yager, president and CEO of iPCS, said in a prepared statement.

Sprint now is freed up to continue the Virgin Mobile acquisition, which will give it a much larger share of the growing prepaid market. That’s especially important for Sprint as it bleeds valuable postpaid subscribers.

But Sprint investors may not be so sure. The company’s stock was down 1.15 percent at about 1:00 Eastern, while shares of iPCS had soared nearly 34 percent.


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