Court’s Refusal to Dismiss iPCS Legal Action Should be Music to Sprint’s Ears

Implications: 1.      Ever since the merger with Nextel, Sprint has had its share of battles with its affiliates. 2.      However, given its recent actions (including giving operational control to Clearwire, being ambiguous about the role of the Baltimore WiMAX trial, and evidently not being forthcoming recently about the amount of CAPEX it will spend specifically on the technology), Sprint seems ambivalent at best about this 4G project.   3.      This suit by iPCS just adds just another fly in the ointment – helping Sprint -- a company that seems to be looking for a graceful way out of its commitment to WiMAX.  

Analysis:  Affiliate, iPCS, is providing one more obstacle in the way of the new Clearwire.  It buys some time for Sprint to take the necessary steps in reorganizing its own company.  The iPCS suit also seemingly gives Sprint another reason for justifying a spinoff of the Nextel portion of the network.  And Sprint can reasonably argue that it cannot afford to purchase iPCS at this time – in order to remove the obstruction.  In addition, the suit may give one or more of the parties that might be having second thoughts an excuse to exit the Clearwire agreement.  

Clearly, Sprint’s contention in court that WiMAX is operating on a different frequency was apparently not enough to get the case dismissed.  Also, it will be hard to argue that this new joint venture does not fall under the definition of “related parties.”    

All in all, this may be the first time in which the Nextel acquisition really pays off for Sprint.