Clearwire Urges Shareholders to Accept Sprint Offer

Clearwire shareholders will vote on May 21, 2013, whether or not to sell the remainder of the company to Sprint. Complicating the decision is a rival bid tendered by Dish Network. But the board of directors at Clearwire is telling shareholders to vote in favor of the sale to Sprint.

That recommendation does not directly affect the larger contest between Dish Network and SoftBank to buy Sprint.

Clearwire faces danger if it does not accept the Sprint offer, the board argues. “The proposed transaction with Sprint provides a clear solution to the substantial funding gap Clearwire is facing,” said to range from $2.1 billion in 2015 up to $3.9 billion in 2017, the board argues.

Although the board might have had other options had it been able to attract a second major anchor wholesale customer, such as T-Mobile USA, no such deals have happened.

“Clearwire has been unsuccessful at attracting a second major wholesale customer, despite concerted efforts and discussions with more than 100 targets,” the board says.

Alternatively, Clearwire has tried to sell excess spectrum since 2010. But after contacting 37 potential buyers, no deals emerged. And had a deal been concluded, Clearwire still would have had a long-term liquidity issue.

Nor could Clearwire hope to sell to a buyer other than Sprint, which has made clear it is an unwilling seller. And bankruptcy, which also has been considered, is unlikely to provide more value than a sale to Sprint.

The Securities and Exchange Commission has approved SoftBank's paperwork regarding its proposal to buy a substantial portion of Sprint Nextel, which also means Sprint can start mailing out its definitive proxy statement relating to the transaction to the company's shareholders.

A vote on whether Sprint should accept the SoftBank offer to buy 70 percent of the company, instead of the rival bid from Dish Network, will be held on June 12, 2013, at a special stockholders' meeting.

Even if Dish Network fails to win Sprint, Dish Network is expected to keep looking for a way to combine its spectrum assets with another firm, such as T-Mobile USA.

In the past, observers have wondered whether Dish Network was fundamentally committed to getting into the mobile business, or if the real objective was simply to maximize the value of its spectrum assets, and the equity value of Dish Network overall.

But there is greater consensus now that Dish Network is serious about getting into the mobile business. And one reason is that Dish Network executives might really believe the traditional satellite-based linear TV business is headed for trouble.