Sprint Corp (NYSE:S) has agreed to pay $131 million to put an end to a long-running class-action suit brought against it by some disgruntled investors. Although the company agreed to a settlement, it maintains no wrongdoing as alleged by the investors who cited that Sprint defrauded them in its dealing with Nextel Communications back in 2005.
Sprint Corp (NYSE:S) was accused by some investors who cited that its $36 billion deal with Nextel in 2015 was irregular and cost them unwarranted losses. The investors heaped the accusations on the company, its former CEO, Gary Forsee and other officers, accusing them of fraudulently inflating the company’s bonds and share prices. The lawsuit cited that the alleged violation of securities laws happened between October 2006 and February 2008.
A hoax deal
According to the disgruntled investors, Sprint and its officers falsely claimed that the company was up to make some billion-dollar gains from the merger with Nextel, something that they said turned out to be hoax because the company lost both money and subscribers in the end.
Sprint Corp (NYSE:S) will meet the $131 million settlement in cash.
The lawyers of the plaintiff said that the settlement reflects more than $12% of the estimated damages, which means that the settlement percentage is very large. Court papers show that the plaintiff lawyers are interested in seeking about $4 million to cover the legal expenses and about 22% of the settlement to cover legal fees.
Battle for subscribers
In the recent times, Sprint Corp (NYSE:S) has been struggling to woo wireless subscribers to its network even as T-Mobile US Inc (NYSE:TMUS) threatens to dethrone it as the U.S. No.3 wireless carrier. The company is offering discounts to entice subscribers to ditch T-Mobile, Verizon Communications Inc (NYSE:VZ) and AT&T Inc. (NYSE:T) for its network.
Sprint also this week revealed that it is in talks to invest in the newly launched streaming music service known as Tidal, which is owned by musician Jay-Z. Tidal is a subscription streaming music that is coming to join the fast-expanding list of providers that include Spotify, Pandora Media Inc (NYSE:P) and soon Apple Inc. (NASDAQ:AAPL).