Bloomberg News

Sprint Said to Increase Clearwire Stake for Board Control

October 18, 2012

Sprint Nextel Corp. (S:US), the company that has agreed to sell 70 percent of itself to Softbank Corp. (9984), acquired Eagle River Holdings LLC’s stake in Clearwire Corp. (CLWR:US), a move that gives it control over the wireless company’s board, according to people with knowledge of the matter.

The transaction could be announced in a regulatory filing (CLWR:US) as soon as today, said the people, who asked not to be identified because the deal is private. Eagle River held a 4.5 percent stake in Clearwire, data compiled by Bloomberg show. Based on yesterday’s closing (CLWR:US) share price of $2.26, the stake is worth about $69.9 million.

Sprint, which already held 48 percent of Clearwire, sought the majority stake to give it added sway over the fate of the company’s wireless-networking capabilities, including lucrative airwaves needed to deliver mobile calling and data. That stands to make Sprint more attractive to Tokyo-based Softbank, which is paying $20.1 billion for most of the third-biggest U.S. mobile- phone company.

“Softbank wants firm ground in the U.S.,” said Jeff Kagan, an independent telecommunications analyst. “It gives the combined company much more spectrum, much more ability to deliver services.”

Sprint, based in Overland Park, Kansas, has no immediate plans for an outright takeover of Bellevue, Washington-based Clearwire, people with knowledge of the matter said this week. Backing by Softbank gives Sprint more firepower to use in its contest with AT&T Inc. (T:US) and Verizon Wireless. Still, a full Clearwire acquisition is seen as too expensive, the people said.

Intel, Comcast

Sprint had also approached Comcast Corp. and Intel Corp. recently to discuss acquiring those companies’ stakes (CLWR:US) in Clearwire, according to the people who have knowledge of the Eagle River deal. It made little headway, they said.

Representatives of Sprint, Clearwire and Eagle River declined to comment. Spokespeople for Philadelphia-based Comcast and Santa Clara, California-based Intel also declined to comment.

Sprint’s overtures to Comcast and Intel were reported earlier by the Wall Street Journal.

Softbank will pay $12.1 billion to Sprint shareholders, and the deal includes $8 billion of new capital, the companies said this week. The transaction will help Softbank enter the U.S., a market that’s still growing in contrast to Japan, where handset shipments tumbled 27 percent over the past five years.

Regulatory Review

Sprint said this week that it expects the U.S. Justice Department’s review of the Softbank deal to be completed within an initial 30-day review period and won’t warrant an extended investigation.

Dallas-based AT&T said gaining control over Clearwire gives regulators cause to pay closer heed.

“Softbank’s acquisition of Sprint and the control it gains over Clearwire will give one of Japan’s largest wireless companies control of significantly more U.S. wireless spectrum than any other company,” Brad Burns, a spokesman for AT&T, said in a statement. “We expect that fact and others will be fully explored in the regulatory review process.”

To contact the reporter on this story: Serena Saitto in New York at ssaitto@bloomberg.net

To contact the editors responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net; Tom Giles at tgiles5@bloomberg.net


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Companies Mentioned

  • S
    (Sprint Corp)
    • $4.96 USD
    • 0.13
    • 2.62%
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