Sprint Scoops Up UbiquiTel
If you can't beat it, acquire it.
That's the game plan of Sprint Corp. (NYSE: S), which has bought up another one of its affiliates. On Thursday, the company announced that it has paid $1.3 billion for UbiquiTel Inc. (Nasdaq: UPCS), a wireless affiliate based in the thriving metropolis of Conshohocken, Pa.
UbiquiTel is one of several companies that sued Sprint last year, arguing that Sprint's 2005 merger with Nextel -- and its plans to merge the two brands -- violated certain affiliate agreements. With this new deal, Sprint and UbiquiTel have agreed to stay any pending litigation.
"Seems cheaper than litigation," says Phil Redman, a research vice president at Gartner Inc. "After the Nextel acquisition (and even before) there was unrest in the affiliate markets. The business model wasn’t working. Now Sprint gains full control, just not top-tier markets." Indeed, it seems Sprint has chosen acquisition over litigation as an affiliate strategy. The company has been scooping up its affiliates, either squelching legal action or avoiding it. Sprint Nextel has paid $427 million for IWO Holdings; $287.5 million for Gulf Coast Wireless; $4.3 billion for Alamosa PCS Holdings; and $1.3 billion for U.S. Unwired. Sprint Nextel also bought former Nextel affiliate Nextel Partners for $6.5 billion.
There are four remaining Sprint affiliates: iPCS, Northern PCS, Swiftel International, and Shenandoah Telecommunications Co. (Nasdaq: SHEN) -- a.k.a. Shentel.
So will they make the next Sprint Snacks?
"We're still in discussions with all four of them, for finding a mutually beneficial outcome for all four parties," says Aimee Metrick, a spokesperson for Sprint Nextel.
— Carmen Nobel, Senior Editor, Light Reading