Dish's mystery partner may be Clearwire
Filing reveals satellite firm has purchased debt from a cash-strapped firm, raising talk of a 4G alliance
Published: 9 August, 2012
READ MORE: M&A | US | Clearwire | LTE
Speculation over a possible tie-up between Dish Network and Clearwire intensified when analysts noticed a detail in the former's second quarter SEC filing, which pointed to the purchase of debt from a mystery, but cash-strapped, company.
Dish chairman Charlie Ergen was asked on the firm's Q2 earnings call whether a $396m strategic investment, revealed in the 10-Q filing, was for the purpose of purchasing some Clearwire debt. The filing said it was for a "single issuer that has indicated that it will need substantial additional capital to meet its business and financial obligations beyond the next 12 months" - certainly something that applies to Clearwire, which is migrating from WiMAX to TD-LTE and then LTE-Advanced in its 2.5GHz spectrum.
Dish has also been linked with possible purchase of some LightSquared debt, possibly with a view to getting that firm's troublesome L-band satellite spectrum cheaply, taking the gamble that GPS issues will eventually be ironed out and the frequencies could then be added to Dish's own S-band holdings.
Clearwire's main investor and customer is Sprint, but it has lost its other major MVNOs, three cablecos (Comcast, Time Warner and BrightHouse) to Verizon Wireless, even though the trio retain stakes in the 4G venture (DirecTV has asked the FCC to force them to divest these holdings, as a condition of their proposed sale of AWS spectrum to Verizon).
Although Sprint is building out its own LTE network and has stopped launching new devices for its Clearwire-based WiMAX service, CEO Dan Hesse insists the venture remains "essential" to its 4G strategy. He said recently that his firm needed Clearwire for excess LTE capacity since it "would run out of capacity in roughly a couple of years", despite using both its 800MHz iDEN spectrum and 1.9GHz PCS band for LTE.
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