A complete buyout of Clearwire by Sprint Nextel would be...
A complete buyout of Clearwire by Sprint Nextel would be beneficial for the No. 3 U.S. wireless carrier, two analysts told investors Wednesday. Speculation that the two telcos were in talks prompted Credit Suisse analyst Stefan Anninger and New Street…
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Research analyst Jonathan Chaplin to analyze the effects of a possible deal in separate emails to investors. Shortly after Japanese carrier SoftBank announced a deal in October to buy 70 percent ownership of Sprint, an SEC filing showed Sprint had bought enough Clearwire stock to give it majority control -- nearly 51 percent -- of the company (CD Oct 19 p7). If speculation about a deal to acquire the remaining 49 percent of Clearwire is accurate, the timing would be surprising, Chaplin said. “We got the impression that [management] was focused on closing the SoftBank deal before engaging in any further deals,” he said. The influx of $8 billion in cash into Sprint as a result of the SoftBank deal makes the Clearwire purchase more of a reality, Anninger said. While a Clearwire buyout may bring “baggage,” it’s the right thing to do, he said. “Sprint needs more spectrum in order to launch a robust LTE network and to offer the services & packages that the company (driven by future owners SoftBank & Masayoshi Son) intends to use to grow its business,” Anninger said. “Until it gets its hands on broadcast TV spectrum (which could take 3-5 yrs), Sprint has few attractive spectrum options beyond [Clearwire].” The spectrum that would come Sprint’s way in a Clearwire buyout remains Anninger’s only concern about such a deal. “The propagation characteristics of [Clearwire’s] 2.5 GHz spectrum remains a question mark,” he said. “While appropriate for high density areas, its ability to cover large geographic regions and to penetrate walls, remains limited.” The Clearwire spectrum would give Sprint the opportunity to deploy 40 MHz TD-LTE channels or 20 x 20 FD-LTE channels, Chaplin said. It would also give Sprint capacity to offer pricing and products that competitors would have trouble competing against, along with reducing the carrier’s long-term capacity costs, he said. “The asset would be even more valuable if Sprint acquires [a combined T-Mobile/MetroPCS] (as we expect them to). Furthermore, we don’t think a Clearwire acquisition would prevent or delay” a future T-Mobile/MetroPCS buyout, Chaplin said.