iPCS Sues Sprint Nextel over Clearwire Transaction

Business Wire, May 12, 2008

Claims Sprint Nextel's Agreement with Clearwire Violates Affiliate Agreements

Seeks to Enjoin Sprint Nextel's Combination with Clearwire

SCHAUMBURG, Ill. -- iPCS, Inc. (Nasdaq: IPCS), the largest independent Affiliate of Sprint Nextel, announced today that three of its subsidiaries filed a complaint in the Circuit Court of Cook County, Illinois against Sprint Nextel (NYSE: S) and certain of its related entities. In its complaint, iPCS claims that:

* Sprint Nextel's recently announced WiMAX transaction with Clearwire Corporation (NASDAQ: CLWR) would breach the exclusivity provisions of IPCS's affiliation agreements with Sprint Nextel; and

* Sprint Nextel is attempting to evade a judgment of the Circuit Court of Cook County, Illinois, relating to the Sprint-Nextel merger, which has been unanimously affirmed by the Illinois Appellate Court and which requires Sprint Nextel to cease owning, operating and managing the Nextel network in iPCS Wireless's territory.

iPCS is seeking a declaratory judgment that Sprint Nextel's consummation of the recently announced Clearwire/WiMAX transaction, and its plan to compete against iPCS, will breach the iPCS agreements with Sprint Nextel. iPCS is asking the Court for a permanent injunction enjoining Sprint Nextel and those acting in concert with it from consummating the WiMAX transaction until such transaction has been modified to comply with the iPCS agreements with Sprint Nextel.

iPCS noted that it has been involved in litigation with Sprint Nextel for nearly three years about the exclusivity provisions of its affiliation agreements, and has repeatedly won significant court victories. On September 20, 2006, the Circuit Court of Cook County, Illinois ruled that Sprint Nextel's ownership, operation and management of its Nextel wireless network in the iPCS Wireless territory violates the iPCS agreements with Sprint Nextel. That judgment was unanimously affirmed by the Illinois Appellate Court on March 31, 2008 and requires Sprint Nextel to cease owning, operating and managing the Nextel wireless network in the iPCS Wireless territory within 180 days, subject to Sprint Nextel's pending request that the Supreme Court of Illinois grant it leave to further appeal the earlier decisions.

iPCS believes that Sprint Nextel's recently announced WiMAX transaction is yet another attempt by Sprint Nextel to breach the exclusivity provisions of the iPCS affiliation agreements. iPCS intends to fully and aggressively protect and defend its exclusivity rights.

Background

In January 1999, iPCS Wireless entered into agreements with Sprint with respect to, among other things, providing iPCS Wireless with the exclusive right to offer Sprint products and services in its territory. In December 2004, Sprint and Nextel Communications, Inc. announced that they had agreed to merge, at which time Sprint also announced its intent to pursue discussions with iPCS and the other Sprint Affiliates with respect to modifying the affiliates' agreements in light of the ramifications of the merger. Specifically, as iPCS (and other Sprint Affiliates at the time) claimed, competition with Sprint Nextel in the iPCS service territory would violate iPCS's exclusivity rights under its agreements.

The iPCS claim that Sprint Nextel's proposed conduct following the merger would breach Sprint's agreements with iPCS has successfully been litigated. In March, 2008 the Illinois Appellate Court unanimously affirmed a 2006 Circuit Court decision requiring that, within 180 days of the date of the final order, Sprint Nextel and those acting in concert with it must cease owning, operating and managing the Nextel wireless network in iPCS Wireless's territory. On May 5, 2008, Sprint Nextel filed a petition with the Illinois Supreme Court requesting permission to pursue a further appeal of these decisions. Additionally, a Delaware court in September 2006 issued a final order in a separate lawsuit prohibiting Sprint Nextel from offering iDEN products and services in iPCS territories in Indiana, New York, Ohio, Pennsylvania and Tennessee using certain Sprint brands and marks.

On May 7, 2008, Sprint Nextel and Clearwire announced their intention to combine their broadband wireless businesses to form a new company. Sprint Nextel would own approximately 51 percent of the new wireless communications company, which would be named Clearwire. As part of the proposed transaction, certain other parties, including Intel Corporation (NASDAQ: INTC) through Intel Capital, Google Inc. (NASDAQ: GOOG), Comcast Corporation (NASDAQ: CMSCA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC), have collectively agreed to invest $3.2 billion into the new company. According to the parties' press release, Clearwire and Sprint Nextel plan to offer a nationwide mobile WiMAX network that would compete with the iPCS wireless service offerings in the iPCS territories. On May 7, 2008, Sprint Nextel filed a complaint for declaratory judgment in the Court of Chancery of the State of Delaware seeking to have the Court rule that the proposed WiMAX transaction is not a violation of the Sprint Nextel agreements with iPCS.