A potential new hurdle in the way of Sprint’s deal to spin off its super-fast WiMax wireless network into Clearwire (CLWR): A lawsuit filed today by Sprint Nextel (S) affiliate iPCS (IPCS).
In a complaint filed in a Illinois Circuit Court, iPCS alleged that Sprint’s deal with Clearwire violates its exclusive right to sell service in certain geographic areas. iPCS wants the court to prevent Sprint and Clearwire from closing their deal until it accounts for iPCS’s exclusivity rights.
Sprint and iPCS are no strangers in court: They’ve been in legal battle for three years, mainly regarding iPCS’s exclusivity rights. Because of this, Sprint had already asked a Delaware court for a “Declaratory Judgment that Sprint’s affiliate agreements with iPCS in no way prevent the operation of the new Clearwire in iPCS territory,” a Sprint rep said by email. “This latest action by iPCS is simply a response to our request,” he said.
iPCS, meanwhile, says Sprint is trying to evade an Illinois judgment that requires Sprint to “cease owning, operating and managing the Nextel network in iPCS Wireless’s territory,” in a release (PDF).
Tiny iPCS has about 640,000 wireless subscribers in seven states in and around the Midwest. The conventional wisdom is that someday Sprint will buy iPCS (market cap $495 million) in a tuck-in acquisition. So far, no deal, but the market is excited today: iPCS shares are up 6.5% on the news of the suit. Sprint shares, meanwhile, are down 2.3% after reporting lousy Q1 earnings this morning.