Feature Article

December 13, 2012

Sprint Now Willing to Cough Up $2.1 Billion for Clearwire Stake

Back on October 18, 2012, more or less immediately following its $20.1 billion deal with Softbank to sell it a controlling interest in the company, Sprint reached out to acquire a controlling interest in Clearwire, raising its interest in the company from 48 to 50.8 percent. Today, the Sprint-Clearwire saga continues, with Sprint now reporting that it has decided to offer Clearwire $2.1 billion to buy up the other 49.2 percent of the company that it doesn't already own.

The deal, assuming it is accepted, would let Sprint take over Clearwire completely. Interestingly - or weirdly - back in June 2012, before Softbank swooped in to give Sprint a lot of cash, Sprint had owned 54 percent of Clearwire and had moved to reduce its stake in the company to 48 percent. It's amazing what some cash in hand will do.

Clearwire Corporation is headquartered in Bellevue, WA, and has been involved with building out next generation wireless networks since it was formed four years ago. It has struggled financially the entire time and has more often than not been short of the dollars needed for delivering a comprehensive network upgrade. Even so, the company holds a substantial amount of wireless spectrum within the U.S. and offers its own branded CLEAR service.

However, Clearwire primarily serves as a 4G provider for a number of operating subsidiaries and through various wholesale relationships with key companies in the retail, technology and telecommunications industries. The company is now constructing a next-generation 4G LTE Advanced-ready network to address the capacity needs of the wireless market.

Sprint itself (actually still Sprint Nextel, though it’s slated to become The New Sprint soon) is based in Overland Park, Kansas, and uses Clearwire's network to deliver its Sprint 4G service. Sprint is also building out its own 4G network at the same time, and wants Clearwire to move forward with upgrading its network to be compatible with Sprint's.

Sprint notes that its board worked out the offer to come in at $2.90 per share. Clearwire's shares have since jumped 13 percent or $0.40 to $3.15 as we write today at 1:30 pm. Both CNBC and The Wall Street Journal had already latched on to the possibility that Sprint would be making such an offer, and had already caused another jump in Clearwire shares.

It's time for Clearwire to go away and simply become part of Sprint. It won't help Sprint move up from its current third place position behind Verizon Wireless and AT&T, but it will ensure that Sprint has enough LTE capacity to meet the promises it is making of delivering true unlimited and unthrottled data plans, especially to its iPhone customers.

Edited by Brooke Neuman

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