Sprint, Clearwire Agree on $2.2 Billion Deal
|Copyright 2014 by Virgo Publishing.|
|By: Craig Galbraith, Online Managing Editor|
|Posted on: 12/17/2012|
This is huge for Sprint's future as Clearwire owns a lot of spectrum that will help America's third-largest carrier further build out its next-generation wireless network. The Overland Park, Kan.-based wireless giant says customers can expect improved service as Clearwire's spectrum and network are migrated to LTE standards.
“Today’s transaction marks yet another significant step in Sprint’s improved competitive position and ability to offer customers better products, more choices and better services," said Sprint CEO Dan Hesse. "Sprint is uniquely positioned to maximize the value of Clearwire’s spectrum and efficiently deploy it to increase Sprint’s network capacity. We believe this transaction, particularly when leveraged with our SoftBank relationship, is further validation of our strategy and allows Sprint to control its network destiny."
SoftBank of Japan is awaiting regulatory approval to buy 70 percent of Sprint for more than $20 billion. The infusion of cash is also expected to help Sprint form a shared-spectrum partnership with DISH Network that would be another step in helping the carrier expand its LTE services.
The Sprint-Clearwire deal, which still needs regulatory approval and is subject to standard closing conditions, was unanimously approved by Clearwire’s board of directors. Clearwire has received commitments from Comcast, Intel and Bright House Networks – who collectively own approximately 13 percent of Clearwire’s voting shares – to vote in support of the transaction. SoftBank has also given the purchase the green light, as required under the terms of its recently announced merger agreement with Sprint.
“Our board of directors has been reviewing available strategic alternatives over the course of the last two years," said Clearwire CEO and President Erik Prusch. "In evaluating available alternatives, a special committee conducted a careful and rigorous process, and based on the committee’s recommendation, our board unanimously determined that this transaction, which delivers certain and attractive value for our shareholders, is the best path forward."
The deal has the potential to make a significant mark on the U.S. wireless market. Sprint, which has been stuck in a distant third place behind Verizon Wireless and AT&T for years, will now have the necessary spectrum to take its LTE network nationwide. Verizon Wireless took the early lead in the LTE race in late 2010 when it turned its network on in select cities. AT&T followed in the summer of 2011, while Sprint turned its on only this past summer. There's some serious catching up to do, but the No. 3 carrier will now have the infrastructure to make up some serious ground.
The sale is expected to close in mid-2013. The total value of Clearwire is approximately $10 billion, including net debt and spectrum-lease obligations of $5.5 billion.