Sprint Nextel agreed to buy one of its affiliates, UbiquiTel, for $1.3 billion. Having affiliate companies fill out its footprint and use the Sprint brand name sure was a good idea for the operator to quickly spread its footprint and allow other companies to carry the roll out cost back in 1998. Now, however, these affiliates are a nightmare for the newly merged Sprint Nextel, significantly jacking up the $35 billion price tag of the merger between Sprint and Nextel. Most of the problems stem from non-compete clauses that Sprint and Nextel have with their affiliates because now the affiliates are independent entities following the merger. The affiliates haven't been happy about negotiating new affiliate deals, which evidently aren't as favorable as their old ones.
We've seen a slew of lawsuits and Sprint Nextel coughed up $3.4 billion in cash for its largest affiliate, Alamosa Holdings, and more than $2 billion for US Unwired, IWO Holdings, Enterprise PCS and Gulf Coast Wireless. Sprint also agreed to pay $6.5 billion to acquire Nextel affiliate Nextel Partners in December. Now it looks like Sprint Nextel will look to avoid more messes by buying out the remaining four affiliates: IPCS, Shenandoah Telecommunications, Swiftel Communications and Northern PCS. On Friday, Shenandoah Telecommunications said it was considering the sale of its wireless operations after failing to settle with Sprint Nextel on a new affiliate agreement.
To read more about Sprint Nextel's purchase of UbiquiTel:
- check out this article from Dow Jones