Sprint acquires controlling stake in Clearwire
Sprint has acquired a controlling stake in Clearwire, a deal which has implications for Sprint's pending buyout deal with Softbank.
Sprint is paying $100 million to purchase shares from Clearwire founder Craig McCaw's investment firm Eagle River Holdings, giving it a 50.8 percent controlling stake in Clearwire, according to documents filed with the SEC today.
Sprint previously held a 49.6 percent stake in the company and has long been Clearwire’s largest shareholder.
Neither company has released details on the deal beyond the regulatory filing, but the announcement came just days after reports surfaced that Softbank was indirectly targeting Clearwire through its $20.1 billion purchase of a 70 percent stake in Sprint.
Both Clearwire and Softbank are constructing TD-LTE networks in the 2.6 GHz band, presenting opportunities to reduce equipment costs through joint purchase agreements, and Clearwire's substantial spectrum resources could be beneficial to Sprint.
Clearwire holds between 120 MHz and 150 MHz of spectrum in its markets, and is using a portion of the airwaves to overlay its WiMAX network with TD-LTE. Sprint has signed up for wholesale access to the TD-LTE network to boost the capacity of its own FD-LTE service.
Sprint could gain a major competitive edge by gaining control over Clearwire's spectrum and network assets, BTIG Research analyst Walter Piecyk said in a research note earlier this week.
"The speeds from a well-built TDD-LTE network, with that much spectrum could materially outpace what Verizon and AT&T are offering in the market today or even three years from now," Piecyk said.
Clearwire is perennially short on funds and recently said it may delay a portion of its TD-LTE buildout. The first 5,000 cell sites for the service are scheduled to be operational next summer, part of a long-term plan to overlay 8,000 WiMAX sites with TD-LTE.
Coverage for the service will be concentrated in urban areas where wireless networks are congested and operators are looking for ways to offload traffic. In addition to Sprint, Leap Wireless International also plans to use Clearwire's TD-LTE network to increase the coverage and capacity of its own LTE service.