Sprint Nextel Affiliate iPCS Files Suit To Block WiMax Merger With Clearwire

A Sprint (NYSE: S) Nextel affiliate operating in Schaumburg, Ill. said it has filed a lawsuit against its parent company to block the joint venture it was forming with Clearwire to roll-out a nationwide broadband company, AP reported. iPCS has 640,600 subscribers in seven states, and filed the suit in Illinois, alleging the new Clearwire service would compete with in its markets and therefore violates an exclusivity agreement signed with Sprint in 1999. Release. Its opposing the $14.5 billion merger that Sprint Nextel announced last week with Clearwire (NSDQ: CLWR). In the deal, the new company would receive outside funding coming from a conglomeration of companies, including Time Warner (NYSE: TWX), Comcast (NSDQ: CMCSA), Intel (NSDQ: INTC) and Google (NSDQ: GOOG).

This is not the first suit Sprint has faced against iPCS. The AP reported that earlier this year, a court upheld a lower court ruling that found Sprint's 2005 purchase of Nextel 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. In anticipation of the suit opposing the deal with Clearwire, Sprint last week asked a Delaware Chancery Court to rule that the Clearwire transaction doesn't violate the exclusivity arrangement with iPCS. In the past, Sprint had similar problems with other affiliates, and resolved the issues by acquiring the company.

Clearwire will announce Q1 results today after the market closes. Sprint Nextel released its earnings earlier this morning. See our coverage here.

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