US operator Sprint Nextel, which Softbank recently agreed to buy, has increased its stake in Clearwire from 48.1% to 50.8%.
According to an SEC filing published today it acquired the stock from Craig McCaw’s Eagle River Holdings, paying US$2.97 per…
US operator Sprint Nextel, which Softbank recently agreed to buy, has increased its stake in Clearwire from 48.1% to 50.8%.
According to an SEC filing published today it acquired the stock from Craig McCaw’s Eagle River Holdings, paying US$2.97 per class A share and US$13.98 per class B share, equalling just under US$100m in total.
In spite of its continual struggles, Clearwire has considerable holdings in the 2.5GHz band which Sprint would want unfettered access to as it plans to expand.
Clearwire’s stock shot up from US$1.30 on 10 October to US$2.69 on 15 October in the light of the Softbank/Sprint deal, with investors betting that it would also be a target.
The acquisition of a majority by Sprint could mark a significant change in fortunes for Clearwire, whose investors had taken steps to cut their losses recently. In early October Time Warner Cable sold its stake in Clearwire, and Comcast has been rumoured to consider doing the same. Since Clearwire’s creation in 2007, its share price has dropped 90.82%.
Taking a majority of Clearwire is only the first step for Sprint and there is a number of unanswered questions that still need to be addressed, Wells Fargo analyst Jennifer Fritzsche said in a note.
“It is hard to see how Sprint would not now have to consolidate Clearwire’s results (and debt) in its own consolidated results if Sprint does indeed get its ownership over 50%.” Fritzsche said.
“This has been an issue for Sprint in the past (and something it has very much tried to avoid) as the inclusion of CLWR’s income statement (and debt) makes Sprint’s consolidated results look even more challenged,” she added.
Analysts at Credit Suisse noted that despite having a majority, Sprint would not have control of Clearwire. “Sprint is currently limited to designating 7 board seats,” the analysts stated. “This is important given that 10 of 13 board seats are required to effect real operating control including actions like changing the c-suite and selling assets.”
Following Softbank CEO Masayoshi Son’s big bet on Sprint, Clearwire has been consistently talked about by analysts as a key part of the operator’s plans going forward.
Reports have now emerged suggesting that Son met with Sprint CEO Dan Hesse in California at the end of June and that was when a deal was first mooted.
Meanwhile the CEO of Japan’s number two operator, KDDI Corp, has said that his company was approached around a year ago to acquire Sprint. Softbank’s biggest rival said it declined to make a bid at the time.
