Sprint Nextel moved to put another affiliate lawsuit behind it with its purchase of Enterprise Communications of Georgia for about $98 million.
Based in Columbus, Enterprise Communications is an exclusive affiliate partner for Sprint, which, like its onetime rival and now merger partner Nextel, also conducts business in the regions of Georgia and surrounding states where Enterprise does business.
Enterprise is among the flurry of affiliates that filed lawsuits against Sprint over competitive issues it would face after its merger with Nextel closed.
The company filed suit in July claiming that the Sprint-Nextel merger would violate its exclusive agreement to be an affiliate for Sprint.
A spokesman for Enterprise told internetnews.com that it expects all issues related to the lawsuit to be removed once the deal passes regulatory and customary approvals, which is expected by the first quarter of 2006.
“There have been lots of discussions between affiliates and Sprint,” said Tom Beal, chief operating officer for Enterprise. “Our owners felt this [purchase] was the best approach for the employees and best for the company.”
A spokesman for Sprint said when the deal closes, it will bring more than 52,000 PCS wireless users as direct customers of Sprint.
“It made business sense to acquire the company,” said Sprint spokesman Nicholas Sweers. “You could take into consideration the litigation, but the litigation is not the driver of the purchase.”
The purchase would enable Sprint to be a direct recipient of customers’ revenues, rather than sharing them in an affiliate arrangement.
Sprint also said it plans to pay about $2 million to acquire licenses for C Block wireless spectrum from an affiliate of Enterprise Communications.
Enterprise Communications employs about 80 people and was an exclusive affiliate for Sprint PCS services in Alabama and Georgia. Revenues for its fiscal year ending Sept. 30 were $54.3 million.
“This was the best decision for our company and our business interests,” added Beal.
Last month, Sprint said it would pay $4 billion to purchase another longtime affiliate, Alamosa Holding Co., to help end a lawsuit over covenants that Alamosa filed suit over.
That purchase bought Sprint about 1.5 million subscribers across 19 states.
Since Sprint closed its merger with Nextel in August, it has been consolidating its networks, which cover about 268 million people, including its affiliate partners.
At the time of the merger closing, Sprint said it was separating the operations of its local telecommunications business, including consumer, business and wholesale operations.
The company also said it will seek regulatory approvals to spin off the local telecommunications business to Sprint Nextel shareholders in a tax-free transaction, which is expected to be completed in 2006.
