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Sprint confirms bid to take control of Clearwire

US carrier offers $2.1bn for the shares it doesn't already own, but may have to up the price to get its hands on the spectrum assets


Published: 13 December, 2012

READ MORE: M&A | US | Sprint Nextel Corporation | LTE

Sprint has confirmed that it is bidding to buy out its fellow shareholders in Clearwire, offering $2.1bn to take full control of an entity which is rich in spectrum.

While Clearwire was initially the focus of Sprint's attempt to pre-empt the big two US carriers in 4G, by rolling out WiMAX before LTE was market-ready, once that strategy failed the two firms have had a fractious relationship. When Sprint unveiled its own LTE roll-out plans, as part of its ambitious Network Vision project, it seemed to be sidelining Clearwire. However, the failure of a proposed deal with LightSquared and the general US dash for spectrum has made the smaller company's plentiful holdings in the 2.5GHz band far more attractive.

Sprint recently said it would not make a firm decision about Clearwire until the completion of its agreement with Japan's Softbank, which plans to take a 70% holding in the US carrier. However, it has now accelerated its plans. These will need both US regulatory and Softbank approval, but the latter is likely to be forthcoming - the Japanese cellco is already a veteran in building out 4G in different bands including 2.5GHz TDD spectrum similar to Clearwire's.

Sprint is now offering $2.90 a share for the 48.3% of Clearwire that it does not already own, which values the venture around $4.2bn and represents a 5% premium on its closing stock price on Wednesday (though a 20% premium on its price on Monday, since the price has leapt on the Sprint takeover rumors). Some analysts think it will have to up the price, given the value of the spectrum holdings.

Shortly after the Softbank deal was announced in October, Sprint bought a small stake in Clearwire to give it majority equity control, though this did not give it full control of the operations and spectrum, which are run by a committee. The main shareholders which will need to sell their stakes to Sprint are Intel and Comcast, thought to hold about 12.4% between them, plus BrightHouse Networks. The other founding partners in the joint venture, Google and Comcast, have already sold their shareholdings.

Sprint has sent its proposal to Softbank for review, according to an SEC filing today. The US firm said last month that it would delay a proxy statement describing the Softbank deal until December 21, which, it now seems, was necessary to enable the Clearwire talks to continue to resolution.

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