With the acquisition of CDMA affiliate Ubiquitel Inc., Sprint Nextel Corp. is another step closer to wrapping up the acquisition of all of its wireless affiliates.
The third-largest U.S. carrier last week agreed to buy Ubiquitel for $1.3 billion, including about $300 million in net debt that Sprint Nextel will assume. Sprint Nextel said it will pay $10.35 per share for all of Ubiquitel’s outstanding shares of common stock in an all-cash merger, subject to Ubiquitel shareholder and regulatory approvals. The deal is expected to close in the second quarter.
As part of the agreement, the two companies will seek to stay a lawsuit pending in the Delaware court of Chancery; Ubiquitel had sued Sprint Nextel for violating its affiliate agreement related to Sprint Corp.’s acquisition of Nextel Communications Inc. last year.
The acquisition of Ubiquitel, based in Conshohocken, Pa., provides Sprint Nextel with another 452,000 direct wireless subscribers and another 151,000 wholesale subscribers. Ubiquitel serves mid-sized markets in California, Idaho, Indiana, Kentucky, Nevada, Tennessee, Utah, Washington and Wyoming. Ubiquitel reported nearly $423 million in revenues last year.
Sprint’s acquisition of Nextel threw the carrier’s CDMA affiliates into an uproar-and into court-as they protested alleged violations of their affiliate exclusivity agreements for selling Sprint products within their territories. Sprint Nextel set up forbearance agreements with some of the affiliates, such as Shenandoah Telecommunications Co., in which Shentel agreed not to sue Sprint Nextel so long as the national carrier limited former Nextel operations in Shentel’s markets. Other affiliates, such as iPCS Inc. and Ubiquitel, took Sprint Nextel to court.
Sprint Nextel has now purchased seven of its affiliates, spending more than $14 billion to do so. In addition to Ubiquitel, Sprint Nextel has bought out Alamosa Holdings Inc., Enterprise Communications Partnership, Gulf Coast Wireless, IWO Holdings, and U.S. Unwired. The acquisition of Nextel Partners, announced in December, is expected to close in the second quarter.
Four independent PCS affiliates remain: privately held Brookings/Swiftel and Northern PCS, plus iPCS Inc. and Shentel. Shentel recently acknowledged that it was in negotiations with Sprint Nextel and exploring the option of a sale of its wireless operations.
