Sprint affiliate moves to block Cleawire deal

KANSAS CITY, Mo. -- An affiliate of Sprint Nextel Corp., iPCS Inc., said Monday it is seeking to block Sprint from forming a wireless broadband company with Clearwire Corp.

Schaumburg-based iPCS, with 640,600 subscribers in seven states, said three of its subsidiaries has filed suit in Cook County Circuit Court, alleging the service would compete with iPCS within its markets and therefore violates an exclusivity agreement Sprint signed in 1999.

Sprint and Clearwire Corp. announced last week they plan to combine their wireless broadband units to create a $14.55 billion communications company, to be called Clearwire, that will continue developing a mobile network based on WiMax technology.

WiMax is similar to the WiFi service found in coffee shops, airports and many homes but able to cover larger areas and supposedly download at speeds faster than the latest cellular networks for movies, games and other data services.

A group of outside investors, including Intel Corp., Google Inc., Comcast Corp., Time Warner Cable Inc. and Bright House Networks, have agreed to pour $3.2 billion into the new company.

Earlier this year, an Illinois appellate court upheld a lower court ruling that found Sprint's 2005 purchase of Nextel Communications Inc. violated its exclusivity agreement with iPCS and has ordered Sprint to divest itself of all Nextel assets in iPCS' territory. Sprint is appealing that decision.

"iPCS believes that Sprint Nextel's recently announced WiMax transaction is yet another attempt by Sprint Nextel to breach the exclusivity provisions of the iPCS affiliation agreements," the company said in a release. "iPCS intends to fully and aggressively protect and defend its exclusivity rights."

Sprint last week asked a Delaware Chancery Court to rule that the Clearwire transaction doesn't violate the exclusivity arrangement with iPCS.

"Because of our ongoing disputes with iPCS, we felt compelled to seek declaratory judgment that Sprint's affiliate agreement with iPCS in no way prevents the operation of the new Clearwire in iPCS' territory," said Sprint spokesman Matt Sullivan. "This latest action by iPCS is simply a response to our request to the court."

Shares of iPCS were up $1.85, or 6.8 percent, to $28.99 in midday trading while Sprint shares were up 19 cents to $9.57.