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Sprint: Ill. Supreme Court Denies Request to Review IPCS Suit

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NEW YORK (Dow Jones) Sprint Nextel suffered another legal setback in its dispute with iPCS, after the Illinois Supreme Court denied its request to review a prior ruling that favored iPCS.

A lower appeals court ruled that Sprint's merger with Nextel in 2005 violated an exclusivity agreement with iPCS, which is the Nextel affiliate in the territories in which it operates. Sprint was hoping for the Illinois Supreme Court to review and overturn the ruling.

With the denial, Sprint has 180 days before it has to cease owning and operating its Nextel network, also known as iDEN, in those areas.

More worrisome, the defeat here may affect a similar legal battle over Sprint's WiMax initiative.

The company, however, said the decision doesn't change things.

"It's business as usual with the iDEN network," said Sprint spokesman Matthew Sullivan.

The denial means even fewer options for Sprint in dealing with the affiliate. The Overland Park, Kan., company could strike a new deal with iPCS, or it could buy the affiliate, as it has done with six of its peers.

Sullivan declined to comment on what Sprint will do, only saying that the company has been considering the issue "for some time."

IPCS, meanwhile, cheered the decision.

"We have believed from the beginning that Sprint's merger with Nextel and its operation of the Nextel wireless network in our territory is in violation of our subsidiaries' management agreements with Sprint," Chief Executive Timothy Yager said in a statement.

Yager said iPCS would press on with its attempts to halt the rollout of Sprint and Clearwire's next-generation WiMAX network. IPCS claims the WiMAX network also breaches the exclusivity agreement.

IPCS, Schaumburg, Ill., stands as the last major independent affiliate of Sprint and the most contentious of the bunch. The company has 654,000 customers in a territory that covers 81 markets in seven states.

The company could force an acquisition by threatening the shutdown of the Midwest iDEN network, said Bank of America analyst David Barden. He estimated that a price tag based on prior deals would be around $860 million.

Sprint has already acquired six affiliates, as well as Nextel Partners, and has struck agreements with smaller players Shenandoah Telecommunications and privately held Swiftel Communications.

Shares of Sprint recently fell 0.9% to $6.74. IPCS rose 9.2% to $22.11.

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

(END) Dow Jones Newswires

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