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Clearwire stock soaring, Dish investment the cause?


marioc21
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So if you've tracking Clearwire's stock since their earnings call, you know that it has soared. The stock has gone from a low of about $0.80/share to $1.77/share at the close today. Today alone the stock was up 18%. It looks like DISH may be the reason why.

 

According to this story: http://blogs.barrons...od=yahoobarrons

 

Dish, in their 10-Q filing with the SEC, stated the following:

 

Current Marketable Investment Securities - Strategic

 

Our current strategic marketable investment securities include strategic and financial investments in public companies that are highly speculative and have experienced and continue to experience volatility. As of June 30, 2012, our strategic investment portfolio consisted of securities of a small number of issuers, and as a result the value of that portfolio depends on the value of those issuers. In addition, a significant portion of the value of these investments is concentrated in the debt securities of a single issuer. The carrying value of the securities of that single issuer as of June 30, 2012 and December 31, 2011 was $396 million and $16 million, respectively. The fair value of the securities of that single issuer as of June 30, 2012 and December 31, 2011 was $393 million and $17 million, respectively. That single issuer has indicated that it will need substantial additional capital to meet its business and financial obligations beyond the next 12 months. The fair value of certain of the debt securities in our investment portfolio, including those of that single issuer, can be adversely impacted by, among other things, the issuers’ respective performance and ability to obtain any necessary additional financing on acceptable terms, or at all.

 

10-Q Filing at SEC: http://www.sec.gov/A...-13752_110q.htm

 

It appears this one statement has lead to speculation that Dish has made an investment in Clearwire. Many people have been wondering what Dish was going to do with the spectrum they own. Most people expect them to have to partner with an existing wireless carrier. It's long been a rumor that Dish may partner with Sprint, although T-mobile and AT&T continuously pop up as well. If Dish has invested in Clearwire, could that signal that Dish + Clearwire/Sprint deal may be getting closer?

 

Update: Could this news have some relevance?:

 

Sprint exec in charge of mergers and acquisitions to leave.

http://www.bloomberg...html?cmpid=yhoo

 

wsj: http://online.wsj.com/article/SB10000872396390443991704577577492797892110.html

[if you don't have a subscription just search for the article headline in google to get a free article pass.]

 

Another sign of future developments?

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Guest 503ducati

I caught all this today as well. It seems this may have been accelerated by AT&T acquisition of Nextwave. I've always wondered why some along the way believed that there would be little value to spectrum above 2GHz. It may not be beach front property but it's scarce acreage.

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I caught all this today as well. It seems this may have been accelerated by AT&T acquisition of Nextwave. I've always wondered why some along the way believed that there would be little value to spectrum above 2GHz. It may not be beach front property but it's scarce acreage.

 

It's definitely valuable for satellite companies if they ever wish to have a real video on demand option without depending on the cable companies to provide the bandwidth.

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That sir.... would make waves

 

I think that Sprint is not really interested in Clearwire's spectrum. They have been keeping them at arm's length all this time. The Dish spectrum is lot closer to their mainstay band, and the Echostar 700Mhz could be aggregated with their 800MHz or sold to AT&T.

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"Sprint said that Clearwire's 2.5GHz spectrum will play an essential role in Sprint's LTE 4G network in the coming years."

 

http://www.phonescoo...cle.php?a=10926

 

AJ

 

I think they said the same thing about the IDEN network a few years ago. It's coach-speak or CEO speak. Plus, under the spectrum swap proposed, they would get 40MHz in return. Nothing to sneeze at.

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"Sprint said that Clearwire's 2.5GHz spectrum will play an essential role in Sprint's LTE 4G network in the coming years."

 

http://www.phonescoo...cle.php?a=10926

 

AJ

 

From the same article:

 

Hesse clearly said that if Clearwire can't or doesn't get its LTE network up and running in a sufficient way, that Sprint may be forced to acquire more spectrum for its 4G network. Hesse didn't say what spectrum bands it would look to acquire, but said that Clearwire's spectrum is highly desirable.

 

It seems to me that they're already making contingency plans.

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I think they said the same thing about the IDEN network a few years ago. It's coach-speak or CEO speak. Plus, under the spectrum swap proposed, they would get 40MHz in return. Nothing to sneeze at.

 

And that statement is true if we take it to mean iDEN spectrum, not network. Regardless, if Sprint is actually wavering on Clearwire, Sprint needs to make up its mind soon. Otherwise, TD-LTE 2600 capable devices -- if Sprint does pursue the Clearwire path -- will just get pushed further into the future.

 

Additionally, the Dish S-band/AWS-4 spectrum is not necessarily all that it is cracked up to be. Its current 20 MHz x 20 MHz MSS configuration likely will not survive the conversion to terrestrial spectrum. Conjecture is that Charlie Ergen will have to give up 5-10 MHz to get full terrestrial authorization. Even the current 2000-2020 MHz x 2180-2200 MHz band plan is up for debate. The FCC and Dish are considering options that would make the spectrum unpaired, would pair the spectrum with refarmed Fed spectrum above 1755 MHz, etc. With so many question marks surrounding Dish's spectrum, it may be no surprise that AT&T has opted to go with WCS instead, as the three years to get it up and running may be faster by comparison.

 

AJ

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It seems to me that they're already making contingency plans.

 

That is just the same old "we can love you or leave you" dance that Sprint has made with Clearwire for the past several years. Honestly, I do not have a problem with Sprint keeping a certain distance from Clearwire. For example, if all of Clearwire's BRS/EBS spectrum holdings were to be attributed to Sprint, then Sprint would immediately become the largest CMRS spectrum holder. The Sprint fanboys among us would rejoice, as Sprint would be in the lead. But then VZW and AT&T would have standing to acquire even more spectrum to match Sprint.

 

AJ

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Clearwire's problem has always been funding. They bit off more than they could chew when they expanded in a lot more markets than Sprint wanted them to, wasting their deployment money and not getting enough income out of Sprint. They thought they would be their own independent full service carrier when all along their fortunes were intimately tied to Sprint's. I still think that they need to go back to being a WISP for at least part of their spectrum.

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Sprint has announce a new debt offering. The press release states the following:

 

Sprint Nextel Corp. (S) announced today that it has commenced an underwritten public offering of notes due 2020 and notes due 2022.

 

Sprint intends to use the net proceeds from the offering for general corporate purposes, which may include, among other things, redemptions or service requirements of outstanding debt, network expansion and modernization and potential funding of Clearwire Corporation and its subsidiary Clearwire Communications LLC.

 

http://finance.yahoo.com/news/sprint-announces-senior-notes-offering-155300741.html

 

Make of that what you will.

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Okay, while we are just throwing ideas against the wall to see what sticks, try this one:

 

Suppose that Charlie Ergen's mystery investment is in Clearwire because he prefers Clearwire's existing ~150 MHz of BRS/EBS spectrum to his ~30 MHz of potential S-band/AWS-4 spectrum. He wants DISH to be able to offer a true video/broadband double play, and he can do the latter much better in urban areas with Clearwire's ample spectrum holdings. Moreover, TD-LTE better fits his fixed (i.e. not mobile) usage profile, not to mention that it jives with his other existing spectrum -- remember, DISH holds Lower 700 MHz E block 6 MHz unpaired licenses across the entire country (absent the New York, Los Angeles, Philadelphia, Boston, and San Francisco BEAs).

 

So, DISH takes control of Clearwire and finances the TD-LTE 2600 roll out, which it piggybacks largely on the Network Vision multi-band platform.

 

Discuss among yourselves...

 

AJ

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Okay, while we are just throwing ideas against the wall to see what sticks, try this one:

 

Suppose that Charlie Ergen's mystery investment is in Clearwire because he prefers Clearwire's existing ~150 MHz of BRS/EBS spectrum to his ~30 MHz of potential S-band/AWS-4 spectrum. He wants DISH to be able to offer a true video/broadband double play, and he can do the latter much better in urban areas with Clearwire's ample spectrum holdings. Moreover, TD-LTE better fits his fixed (i.e. not mobile) usage profile, not to mention that it jives with his other existing spectrum -- remember, DISH holds Lower 700 MHz E block 6 MHz unpaired licenses across the entire country (absent the New York, Los Angeles, Philadelphia, Boston, and San Francisco BEAs).

 

So, DISH takes control of Clearwire and finances the TD-LTE 2600 roll out, which it piggybacks largely on the Network Vision multi-band platform.

 

Discuss among yourselves...

 

AJ

 

I was thinking the exact same thing. Mount the Clearwire antenna on the dish and bam, internet and TV in one. Bundle Sprint in there, allow LTE access with Sprint phones... Then Verizon partners with the cablecos, there is enhanced competition between them and the CDMA carriers will have taken over the US wireless market, leaving AT&T and T-Mobile in the cold.

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Okay, I'd like to play this game too. How's this:

 

Everybody seems to be assuming Clearwire was the recipient of Dish funds. What if Dish in fact invested in Sprint? Then today we have news of Sprint putting out a new debt offering which might be used to fund Clearwire. What if Dish is buying Sprint debt as part of some new network sharing deal that gets announced in the 3rd or 4th quarter? Then Sprint pumps more money into Clearwire for them to build out their LTE hotspots everywhere that get used by both Sprint and Dish customers?

 

How's that?

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I could be wrong, but I think that Ergen's outlay is an equity investment, not a debt purchase.

 

AJ

 

No, it's a debt purchase. Look at the paragraph I quoted in the op from the 10-Q. Here's the relevant sentence:

 

In addition, a significant portion of the value of these investments is concentrated in the debt securities of a single issuer. The carrying value of the securities of that single issuer as of June 30, 2012 and December 31, 2011 was $396 million and $16 million, respectively.
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No, it's a debt purchase. Look at the paragraph I quoted in the op from the 10-Q. Here's the relevant sentence:

 

Good catch, Mario. It could be Sprint. Either way, with the AT&T commitment to WCS spectrum recently, a Sprint-DISH tie up -- indirectly through Clearwire or directly through Sprint -- is a natural fit.

 

AJ

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I think 40 mhz of 2ghz S-Band spectrum should make capacity for unlimited data a cinch.

 

If they could get rid of the restrictions on the spectrum, it might be just that! I believe that the FCC will eventually be auctioning off the F-block PCS spectrum that is adjacent to the G-block that sprint already owns. If sprint is able to gain this spectrum, they will also own the spectrum directly below Dish's purposed spectrum. This might help interplay between them and also allow for no/small guard bands because it will be using the same LTE technology and will not have to worry about disturbing satellites (at least on the low end).

If they do get some kind of hosting agreement, that allows sprint to offload traffic onto their network, it might also include use of sprint's 800MHz LTE for those out of range of the dish spectrum. And of course everyone will use Clearwire's huge TDD-LTE network when in range... Just a thought.

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If they could get rid of the restrictions on the spectrum, it might be just that! I believe that the FCC will eventually be auctioning off the F-block PCS spectrum that is adjacent to the G-block that sprint already owns.

 

Actually, you mean the AWS-2/PCS H block. The PCS F block is 15 MHz below and on the other side of the PCS C block from the PCS G block that Sprint controls nationwide.

 

If they do get some kind of hosting agreement, that allows sprint to offload traffic onto their network, it might also include use of sprint's 800MHz LTE for those out of range of the dish spectrum. And of course everyone will use Clearwire's huge TDD-LTE network when in range... Just a thought.

 

As I mentioned previously, DISH controls the Lower 700 MHz E block 6 MHz unpaired licenses nationwide (except for New York, Los Angeles, Philadelphia, Boston, and San Francisco). Another thought is that a partnership between Sprint and DISH could enable them to utilize 5 MHz of the E block for carrier aggregation supplemental downlink paired with the 5 MHz x 5 MHz (or 3 MHz x 3 MHz) LTE carrier in Sprint's SMR 800 MHz spectrum. That would create effectively a 5 MHz x 10 MHz (or 3 MHz x 8 MHz) LTE Advanced carrier. And, as an added plus, the Lower 700 MHz supplemental downlink would have similar propagation characteristics to those of the SMR 800 MHz main LTE carrier.

 

AJ

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