Sprint Nextel's proposed takeover of Clearwire stands to give the carrier a
substantial advantage over bigger rivals Verizon Wireless and AT&T when it
comes to spectrum holdings. And if the deal ultimately closes, it could spark
the two larger carriers to scramble for more airwaves.
Clearwire's board of directors this week approved Sprint's modified offer of
$2.97 a share, brings the total bid to $2.2 billion. That was up from an offer
of $2.90 per share.
The bid has been approved by Japanese carrier Softbank, which has agreed to
acquire 70 percent of Sprint for approximately $20 billion. Comcast and Intel,
the two remaining strategic investors out of a group that once included Google
and Time Warner Cable, have also given their blessing for the new offer.
Clearwire has more than twice the spectrum that Sprint holds. Combining the
assets of the two companies will give Sprint a substantially larger swath of
real estate over which it can deliver advanced wireless services.
The deal, if consummated, will complete an odyssey that began four years ago
when Sprint agreed to combine its own WiMAX network efforts with Clearwire's
spectrum holdings in order to jump start construction of a nationwide wireless
broadband network. The joint venture has since racked up billions in losses as
it invested heavily to build out high-speed wireless networks in order to
compete with AT&T and VZW.
The venture effort stumbled repeatedly as the partners clashed over strategy
and business details, including which markets should be prioritized for
construction and expansion and how Sprint would compensate Clearwire for use of
As part of the new deal, Sprint will provide Clearwire with $800 million in
interim financing, which will allow continued construction of the network.
Clearwire Chief Executive Officer Erik Prusch indicated that without the deal,
Clearwire faces possible restructuring. Other options explored over the last
several years, including selling off a chunk of Clearwire's spectrum licenses,
have not panned out.
The deal still faces opposition from some of Clearwire's current
shareholders, who believe the company's spectrum licenses are worth
significantly more than Sprint's offer. The $2.97 per share offer, however, is
reportedly as high as Softbank was willing to go. Any acquisitions pursued by
Sprint must be approved by the Japanese company under the terms of its proposed
purchase of majority control in the mobile carrier.
By Tim McElgunn