AirGate PCS Inc., a wholly-owned subsidiary of Alamosa Holdings, Inc. has filed a complaint against Sprint Corporation and Nextel Communications, Inc. alleging that the proposed merger between the two will lead to a breach of existing agreement between Sprint and AirGates on exclusive rights to provide wireless services in certain territories. The case has been filed in the Delaware Court of Chancery.
The lawsuit alleges that Nextel is unlawfully interfering with AirGate’s exclusive rights under such agreements. With the filing of the lawsuit, the simmering tension between Alamosa, the largest CDMA 3G wireless network in the US and Sprint Corporation has come to the surface. Ever since Sprint’s public announcement of its proposed merger with Nextel, Alamosa has been trying to draw the attention of Sprint management the pitfalls of this merger on the existing agreement which it has with AirGate. But senior Alamosa officials now confirm that chances of a patch up are very dim which has resulted in the lawsuit. Says David E Sharbutt, Chairman and Chief Executive Officer (CEO) of Alamosa, “Neither Sprint nor Nextel should be allowed to breach previous agreements in pursuit of their goals. Sprint agreed that AirGate and Alamosa would be the exclusive providers of wireless services in their territories and that they would be entitled to specific performance of their agreements with Sprint, and we expect Sprint to fulfill its contractual commitments to AirGate and Alamosa.”
In the complaint filed with the court, AirGate has primarily sought an order directing Sprint and its affiliates to specifically perform their contractual obligations under their agreements with it. The company has also demanded an injunction preventing Sprint and Nextel from taking any action or entering into any agreement that would violate the exclusivity rights contained in the previous agreements.