One immediate response to yesterday’s blockbuster $20.1B deal between Softbank and Sprint has been speculation that Clearwire might be next. Indeed, Clearwire’s has gotten a gigantic boost lately, gaining 100% since the middle of last week as traders try to forecast the next move. But there are reasons why nothing is likely to be imminent, foremost of which is the simple question, “What’s the rush?”
Sprint’s existing 49.6% stake in Clearwire means they can take their time, nobody’s going to take it away from them. Likewise, Clearwire is not in any immediate danger and its current TD-LTE buildout plans seem quite compatible with Softbank’s intentions. So why rush into anything before they’ve even filed anything with the regulators for the Sprint deal, let alone gotten a response? The financial markets move so fast these days that sometimes they forget that the real world has its own rhythm that doesn’t get counted in microseconds but rather in quarters and years.
Some are speculating that a bid for MetroPCS is more likely, trying to take away the prize from T-Mobile USA. In that case timing is much more of an issue of course, so if Softbank is interested in both then they’d act on MetroPCS while keeping Clearwire on ice. But I’m not sure Softbank really needs to get into a bidding war for MetroPCS. If anything, adding an integration on top of their rejuvenation plans for Sprint might hurt as much as the scale might help.
But the future of the giant pile of 2.5Ghz spectrum that Clearwire is sitting on will eventually need some attention. While they may not have any immediate plans for it, the obvious potential to bring it in-house when the time is right is clearly a big piece of Softbank’s long term plans for taking on the Verizon and AT&T. It would give them a very deep bench when it comes to raw bandwidth, and perhaps enable the ‘unlimited data’ train to keep on rolling.
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Categories: Mergers and Acquisitions · Wireless
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Well, I can think of one reason… Clearwire has to fund its business plan. One way they can do this is by selling off spectrum. If Softbank and Sprint want a competitive advantage over the other 3, they will want as little of this spectrum sold as possible. Clearwire’s leverage here is the fact they could sell of sizeable chunks of this spectrum. This will most likely happen sooner than later due to the recent deals as other suitors will move quickly before the window of opporunity closes.
I find it interesting how this bloomberg article takes a life of its own… It’s now being reported that “Sprint Said” when in fact the blurb only mentions people with knowledge… then it quotes someone who is short the stock… all when CNBC was reporting how CLWR was a critical component and blommberg itself reported that Sprint was in discussions with Eagle River/McCaw.
FWIW, I hadn’t read the bloomberg article before writing this post. But I don’t doubt that each side of the CLWR trade has been doing its best to influence things.
Stanton/CLWR is asking a high price for giving up control of any of their spectrum. Hesse has never liked that and has been consistent in downplaying, ignoring and starving CLWR. He has convinced Son of that in the near term, but other analysts have expressed open skepticism of that path and Mr Son, the first money challenge to that path, is demurring. As data demand grows, Son and others will have their day, and Mr Hesse and Sprint will be disconnected from CLWR.