Sprint Nextel today announced plans to acquire two more affiliates. This as Nextel Partners continues manuevering in its “Put” option with Nextel, and as acquisitions already announced and planned continue to play havoc with lawsuits taking one stance or another concerning the merger.
IWO holdings is the first in this balancing act. They were spun off from U.S. Unwired ealier this year as part of a reorganization. Currently serving something more than 273,000 subscribers across New York, New Hampshire, Vermont, Massachusetts, and Pennsylvania, their network also provides coverage over 4.8 million potential customers. That’s a lot of room for growth.
Just as Hurricane Katrina came along to possibly annihilate Gulf Cost Wireless’ network, Sprint Nextel today announced that they would acquire this affiliate, too. Gulf Coast represents about 95,000 customers throughout Southern Louisiana and Mississippi.
Both affiliates have agreed to seek an immediate stay in litigation that was pending before the U.S. District Court in the Middle District of Louisiana.
These come on the heels of Sprint Nextel’s acquisition of U.S. Unwired last month for about $1.3 billion. together with the $427 million for IWO Holdings, and Gulf Coast for $287.5 million, brings the total costs of affiliates over $2 billion… so far.
In the meantime, on the Nextel side, Sprint Nextel has moved forward with an appraisal process of Nextel Partners’ holdings. This is being done instead of an attempt to negotiate a final value for the Nextel affiliate. Nextel Partners, in the meantime, is reporting that it will recommend that its shareholders approve the “put” option that would require Sprint Nextel to buy out the remaining 68% of the affiliate that Nextel did not already own before its merger with Sprint. That option, written into the affiliate contract with Nextel, requires a purchase at “fair market value” plus a “put premium.” Currently, Nextel Partners’ market capitalization is valued at around $7 billion.
These maneuverings could easily double the price of the merger, and there are still Sprint affiliates out there with moves to play in this “game.” Alamosa PCS bought out AirGate PCS, Inc earlier this year, and AirGate already has a complaint filed. In the meantime, Horizon Personal Communications and Bright Personal Communications Services LLC are in the middle of renegotiating their affiliate contracts, with a deadline of January 1st to arrive at some conclusion.