Sprint Nextel Buys Affiliate UbiquiTel For $1.3 Billion

NEW YORK -(Dow Jones)- Sprint Nextel scooped up another one of its affiliates after agreeing Thursday to pay $1.3 billion in cash to acquire UbiquiTel.

Sprint agreed to pay $10.35 a share for UbiquiTel, which serves 452,000 direct subscribers and 151,000 wholesale subscribers in nine states from California to Tennessee.

The deal further increases the likelihood that Sprint will run the table and buy out the remaining four affiliates: IPCS Inc., Shenandoah Telecommunications Co., Swiftel Communications and Northern PCS. On Friday, Shenandoah said it was exploring the option of a sale after failing to reach an affiliate agreement with Sprint.

The merger between Sprint and Nextel Communications has proven more expensive than the initial $35 billion price tag on the deal. In addition to UbiquiTel, Sprint paid $3.4 billion in cash for its largest affiliate, Alamosa Holdings, and spent more than $2 billion for US Unwired, IWO Holdings, Enterprise PCS and Gulf Coast Wireless Limited Partnership.

Sprint also agreed to pay $6.5 billion to acquire Nextel affiliate Nextel Partners in December. Unlike the Sprint affiliates, Nextel Partners shareholders had the option of forcing a buyout but still had to go through some legal wrangling before a deal was struck.

The Sprint affiliates also used legal pressure to complete their deals. Earlier in April, UbiquiTel and Sprint were fighting in a Delaware court over the affiliate's claim that the merger between Sprint and Nextel violated its exclusivity agreement with Sprint in the territories it serves. The deal effectively squashes those claims.

Sprint's $1.3 billion offer to UbiquiTel values the company at $2,159 per subscriber when factoring both wholesale and direct customers. That's lower than Alamosa's $2,267 figure, but in the range of the other affiliates. Analysts said Alamosa deserved a premium because it was by far the largest player and toughest hurdle for Sprint.

Shares of UbiquiTel closed Wednesday unchanged at $10.19. The stock was up 6 cents recently in premarket activity, according to Inet.

Shares of Sprint closed Wednesday at $25.65, down 53 cents, or 2%.

-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 20th April 2006