Sprint, SoftBank, Clearwire CEOs Discuss $2 Billion Pending Deals With FCC Chairman

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By Paul Barbagallo  

The chief executives of Sprint Nextel Corp., SoftBank Corp., and Clearwire Corp. on March 14 met with Federal Communications Commission Chairman Julius Genachowski and his top advisers to discuss Softbank's proposal to acquire a 70-percent stake in Sprint, a possible signal that the agency could soon approve the $2 billion deal.

According to an ex parte filing submitted to the FCC late March 18, the meeting took place between Daniel Hesse, CEO of Sprint; Masayoshi Son, chairman and CEO of SoftBank; Erik Prusch, CEO of Clearwire; and Genachowski; Ruth Milkman, chief of the FCC's Wireless Telecommunications Bureau; Mindel De La Torre, chief of the FCC's International Bureau; Zachary Katz, FCC chief of staff; Charles Mathias, special counsel to Genachowski; and Kate Dumouchel, special counsel to the FCC general counsel.

CEOs Tout Broadband Competition Gains

At the meeting, the companies told the commission officials that the completion of the Softbank-Sprint transaction will allow Sprint to acquire the remaining shares of Clearwire that it does not already own, resulting in Sprint's 100 percent ownership of Clearwire and creating a “stronger competitor in the wireless broadband marketplace.” With the help of Japan-based SoftBank, Sprint offered in December to buy out Clearwire for $2.1 billion. Sprint had invested in Clearwire in 2008 as part of consortium that included Google Inc., Intel Corp. and Time Warner Cable Inc., and now owns 51.7 percent of the wireless network operator.

To build a 4G LTE (fourth-generation, long-term evolution) mobile broadband network, Sprint needs spectrum, of which Clearwire has an ample amount. Clearwire holds more than 9,000 2.5 GHz licenses and leases covering 411 of the 493 BTAs (basic trading areas) in the country. All told, the company maintains an average of 120 MHz to 150 MHz of spectrum across its geographic market holdings, by far the largest spectrum holder of any wireless carrier, including the No. 1 and No 2 nationwide wireless carriers, Verizon Wireless and AT&T Inc.

Softbank Readies $8 Billion Investment

Softbank is planning to invest $8 billion to help speed Sprint's 4G LTE deployment, which will enable the company to better compete with the likes of Verizon and AT&T, the CEOs told agency officials.

Sprint is now the No. 3 nationwide wireless carrier in the United States, ahead of T-Mobile USA Inc., which just secured FCC approval to acquire the No. 5 carrier MetroPCS Communications Inc.

SoftBank's Son noted during the meeting that when his company purchased Vodafone's wireless interests in 2006, two large incumbents in Japan held 80 percent of the market. “Through innovative products, pricing, and marketing, SoftBank is now poised to become the second largest wireless provider in Japan,” the filing stated. “Through SoftBank's investment in Sprint, he [Son] hopes to bring a similar competitive spark to the U.S. wireless marketplace.”

As for Clearwire, the company's chief noted the importance of “speedy approval” of both transactions, emphasizing that they will provide additional funding for the expansion of Clearwire's LTE services and that “any significant delay” would make Clearwire more “vulnerable.”