Sprint's Clearwire Buy 'Doesn't Solve All Problems'
Copyright 2014 by Virgo Publishing.
By: Craig Galbraith, Online Managing Editor
Posted on: 12/18/2012



 

**Editor's Note: Please click here  for a recap of the biggest channel-impacting mergers in Q3 2012 or here for the biggest M&A during that time in the service-provider and BSS/OSS spaces.**

The battle for third place in the U.S. mobile market is really heating up.

Now that's not to say that Sprint – which on Monday struck a $2.2 billion deal to buy the half of Clearwire that it doesn't already own – won't be able to catch giants Verizon Wireless and AT&T down the road. But right now, keeping T-Mobile USA off its heels is the task at hand.

T-Mobile, America's fourth-largest wireless provider, is in the process of buying MetroPCS, the fifth largest. Third-place Sprint could've made a play to outbid T-Mobile for MetroPCS – and still could – but the purchase of spectrum-rich Clearwire is a more important move in order to further build out its nascent LTE network.

Japan's SoftBank is going through the regulatory process to buy 70 percent of Sprint. It's that cash infusion that helped fund the Clearwire buy, as well as a potential shared-spectrum deal with satellite provider DISH Network.

“[The Sprint-Clearwire] deal seemed inevitable, but it’s also not quite yet done," noted Rich Karpinski, senior analyst with Yankee Group, commenting on a New York Times article. "When SoftBank bought up Sprint, it gave the operator, which seems to constantly be in turnaround mode, a tremendous capital boost to fund not just the projects currently on the table – such as its Network Vision upgrade or iPhone deal – but more importantly what comes next.

"Sprint had a couple of forks it could take, including meddling with T-Mobile’s MetroPCS acquisition," the analyst added. "But the most obvious move was to buy up the rest of Clearwire that it didn’t already own (especially if other suitors like Dish were circling Clearwire, as has been rumored). Doing so doesn’t solve all the problems it faces (most notably, it’s still battling with T-Mobile for the No. 3 spot in the market, with AT&T and Verizon quite a bit ahead in the distance), but it gives it control of an important asset and a path to a spectrum-rich future."