The news sent shares of affiliate company iPCS Inc (IPCS.O: Quote, Profile, Research, Stock Buzz) down more than 20 percent, as the move dashed hopes that it could be acquired by Sprint as a way to resolve their iDEN legal battle.
Sprint took on the iDEN network when it acquired Nextel Communications in 2005.
But an Illinois court ruled earlier this year that the Nextel deal violated Sprint's exclusivity agreement with iPCS, and ordered the company to cease owning or operating the iDEN network in parts of Illinois, Iowa, Michigan and Nebraska, where iPCS operates.
Sprint's shares rose 4.13 percent to $5.29 as investors saw the move as a step towards resolving its troubles with iPCS. Shares of iPCS, however, tumbled 21.6 percent to $14.93 as Sprint's move disappointed some investors who had bet on Sprint acquiring iPCS as one way to resolve the matter.
"If Sprint is able to find a buyer, this is obviously bad for iPCS shareholders," said Hudson Square Research analyst Todd Rethemeier.
A source with knowledge of the situation said there were already interested parties, although analysts --including Rethemeier-- said any bid was unlikely to be very high as Sprint was losing iDEN customers.
Sprint last year looked into selling its iDEN network but gave up that plan amid a tightening credit market, and instead has outlined plans to rejuvenate that business with new calling plans.
The company said on Friday that it would hold onto the rest of its iDEN network assets and that the sale in parts of the Midwest will have "a de minimis impact" on its financial results.
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