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Clearwire investor wants spectrum sale to anyone but Sprint


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Nothing ever comes easy for Sprint I guess...

 

http://www.reuters.c...tionNews&rpc=43

 

 

Thu Nov 1, 2012 1:08pm EDT

 

(Reuters) - A major shareholder pressed Clearwire Corp (CLWR.O) on Thursday to sell excess wireless spectrum to help bankroll its multi-year network expansion, rather than hand over control to Sprint Nextel (S.N) at a price reflecting its "unnecessary distress."

 

Mount Kellett Capital Management, which owns 7.3 percent of Clearwire voting stock, issued a statement to Clearwire directors urging the company to consider all options - including a sale of spectrum - to fill an estimated $1 billion funding shortfall as it builds its high-speed wireless network.

 

The investment firm took issue in particular with Sprint's deal to acquire a majority interest in Clearwire by buying a stake from the company's founder, Craig McCaw, and his investment vehicle Eagle River.

 

Mount Kellett said the transaction price did not fully reflect Clearwire's full value if it were allowed to finish its network buildout.

 

"While spectrum values continue to increase, Clearwire faces a liquidity need now that must be met," the private investment firm said in its statement. "How can the Board assure that the Company has adequate financial resources? To us, the answer is obvious: sell excess spectrum."

 

"The Board should immediately hire an investment bank and task it with running a sales process to sell a substantial portion of the Company's excess spectrum to the highest bidder or bidders."

 

Mount Kellet added that Sprint should be kept out of any auction, and warned Clearwire's board that it may take further action if the board of directors were to proceed with the Sprint deal. (Reporting by Edwin Chan; Editing by Phil Berlowitz)

 

http://dealbook.nyti...er=yahoofinance

 

By MICHAEL J. DE LA MERCED

 

 

Sprint Nextel may have designs on the struggling cellphone network operator Clearwire, but a minority investor in Clearwire is calling on the company to remember its smaller shareholders.

 

Mount Kellett Capital Management, a $7 billion hedge fund that holds a 7.3 percent stake in Clearwire, sent a letter to the company’s board on Thursday asking it to consider selling off what it called excess wireless spectrum. Such a sale could bring in money that would help stave off default at the network operator.

 

The issue at hand is that Clearwire already needs about $1 billion to continue building its network and refitting it for the latest in wireless data technology, Long-Term Evolution. And it already carries $4.2 billion in long-term debt while losing money for at least the last five years.

 

What Mount Kellett is worried about is what analysts suspect is the most likely end for Clearwire: namely a takeover by Sprint, which has sold a majority stake to the deeper-pocketed SoftBank of Japan. Sprint’s chief executive, Daniel Hesse, has said that the deal will give Sprint the resources to take part in the mergers activity he has long believed is necessary.

 

Instead, Clearwire could run an auction of what the hedge fund called its spare spectrum, which could fetch higher prices from any number of wireless companies looking to build their own networks. Those could include AT&T, which agreed in August to buy NextWave Wireless for $600 million to gain its spectrum; a revitalized T-Mobile USA, which plans to merge with MetroPCS; or Dish Network, which has dreams of offering cellphone service.

 

Any of those would be a better alternative than selling out to Sprint in a distressed state and at a bargain-basement price, Mount Kellett said.

 

“Holding on to excess spectrum and letting that value accrue to Sprint, so that Sprint can purchase the company’s excess spectrum cheaply would be an egregious violation of stockholder interests,” Jonathan Fiorello, Mount Kellett’s chief operating officer, wrote in the letter.

 

In its letter, however, Mount Kellett acknowledges that it faces a pretty big hurdle: Sprint, which is already is a business partner with Clearwire, owns more than 50 percent of the company and has picked seven of the 13 board seats.

 

So, the investment firm has called on the wireless service provider’s directors to remember their duties to all shareholders. Failing to do so might invite more serious action, Mr. Fiorello wrote:

 

Should the board fail to take the necessary steps and find itself needing to capitulate to a distressed sale, we will have no choice but to consider whether the board has the best interest of the Company and ALL of its stockholders in mind or only those of its controlling stockholder. In that event, we will consider all available options to prevent or redress the destruction of stockholder value.

 

A Clearwire spokeswoman wasn’t immediately available for comment.

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These guys want their cake and eat it too. Without Sprint, Clearwire would be worthless and bankrupt. You cannot remove Sprint from the picture as investor and wholesale customer and have any value to Clearwire at all. They are talking out of both sides of their mouth.

 

In order to fairly do what they are asking, you have to completely remove Sprint from the Clearwire picture. Then Clearwire goes bankrupt in 30 days. Then what does that get them? Nothing.

 

Sprint is just exercising its rights for Clearwire. Rights that existed when Mount Kellett invested. Rights they knew all along. Nothing has changed, except Sprint now has money. Boo hoo Mount Kellett. Boo hoo. :cry:

 

Robert

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Robert do you believe that this along with the opposition they face from AT&T and whomever else may cause this merger to not go through? Or what about FCC approval in general? It's silly to think that clearwire wouldn't won't them to have that spectrum.

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At some point, Mount Kellett will want to sell their 7.3% stock holding and get out of Clearwire. Obviously, Mount Kellett is trying to blackmail Sprint (=Softbank) into paying an early premium for Mount Kellett's stock by threatening expensive (but most likely unsuccessful) legal action, in order to remove Mount Kellett as an objector (and potential litigant). I suspect Hesse (=Son) willl eventually tell them to pound sand.

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Robert hit the nail on the head! Whiny babies who would have already lost their investment completely if sprint had not been there.

 

Blame the legacy clear folks and all the refuted opportunities presented for them to have more synergy with sprint. Its the very mindset of this "hidden value that shouldnt be shared with sprint" that has driven the company into the ground. So yeah , keep it up.

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Okay, call Mount Kellett's bluff. Put up excess BRS/EBS 2600 MHz spectrum for sale. Now, who is buying?

 

AT&T? Not likely. AT&T has hitched its LTE future to renovating the WCS 2300 MHz band.

 

VZW? Not likely. VZW has acquired oodles of AWS 2100+1700 MHz from SpectrumCo-Cox and still needs to sell off its Lower 700 MHz A/B block holdings.

 

T-Mobile? Maybe. But T-Mobile has its hands full dealing with MetroPCS integration over the next several years.

 

DISH? Maybe. But Charlie Ergen has his own S-band/AWS-4 spectrum issues and cannot decide whether he is a spectrum buyer or seller. If he straddles the fence any further, Ergen is going to have barbed wire permanently embedded in his butt crack.

 

So, really, who are the buyers out there that actually want BRS/EBS 2600 MHz spectrum? I can name one: Sprint.

 

AJ

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Robert do you believe that this along with the opposition they face from AT&T and whomever else may cause this merger to not go through? Or what about FCC approval in general? It's silly to think that clearwire wouldn't won't them to have that spectrum.

 

To clarify, it's not a merger. SoftBank is buying a large investment stake in Sprint. That being said, I think this has no effect on any of it. Mount Kellet is trying to maximize their share value, any way they can. Even if it stretches the realms of reality.

 

Robert

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Not sure why I put merger was rushing... But I know I read somewhere that AT&T was gonna do whatever they could to object to the investment. Simply because sprint opposed the tmobile merger. And they want all the spectrum they can get ,even though they won't let customers do what they want with their data.

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Okay, call Mount Kellett's bluff. Put up excess BRS/EBS 2600 MHz spectrum for sale. Now, who is buying?

 

AT&T? Not likely. AT&T has hitched its LTE future to renovating the WCS 2300 MHz band.

 

VZW? Not likely. VZW has acquired oodles of AWS 2100+1700 MHz from SpectrumCo-Cox and still needs to sell off its Lower 700 MHz A/B block holdings.

 

T-Mobile? Maybe. But T-Mobile has its hands full dealing with MetroPCS integration over the next several years.

 

DISH? Maybe. But Charlie Ergen has his own S-band/AWS-4 spectrum issues and cannot decide whether he is a spectrum buyer or seller. If he straddles the fence any further, Ergen is going to have barbed wire permanently embedded in his butt crack.

 

So, really, who are the buyers out there that actually want BRS/EBS 2600 MHz spectrum? I can name one: Sprint.

 

AJ

 

I fully agree with you. Clearwire has been trying to sell their excess spectrum for couple of years now. Nobody is biting. I'm not privy to the partnership agreement but I'm pretty sure that Sprint has a right of first refusal to the spectrum they brought in to Clearwire (they would be total fools if they did not). Which leaves only the spectrum that old Clear brought in which is basically leased spectrum from educational institutions and the Catholic Church. Since it's leased spectrum, it does not have as much value.

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I fully agree with you. Clearwire has been trying to sell their excess spectrum for couple of years now. Nobody is biting. I'm not privy to the partnership agreement but I'm pretty sure that Sprint has a right of first refusal to the spectrum they brought in to Clearwire (they would be total fools if they did not). Which leaves only the spectrum that old Clear brought in which is basically leased spectrum from educational institutions and the Catholic Church. Since it's leased spectrum' date=' it does not have as much value.[/quote']

 

And Sprint is more likely to overpay its value than anyone else, even if others were interested. And Mount Kellett knows it. This is all just a bargaining tactic. Or if I put my conspiracy theory hat on, they were put up to it from AT&T.

 

Robert via Nexus 7 using Forum Runner

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Not sure why I put merger was rushing... But I know I read somewhere that AT&T was gonna do whatever they could to object to the investment. Simply because sprint opposed the tmobile merger. And they want all the spectrum they can get ,even though they won't let customers do what they want with their data.

 

Are you referring to the press release that AT&T sent out a couple weeks ago? Because that didn't sound to me like AT&T opposed the investment at all. They just said that would make the wireless market more competitive. That sounds like AT&T are trying to build leverage for more mergers and spectrum acquisition. They were pointing out that if the Softbank/Sprint deal goes through, Sprint will still be able to compete effectively if AT&T wants to buy up any other carriers later on. I suggest reading the press release again, because AT&T used very precise wording in the last sentence to send this message to the FCC and tell them to back off on its regulations. They never once said anything that was actually negative about the Sprint/Softbank deal.

 

"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. We expect that fact and others will be fully explored in the regulatory review process. This is one more example of a very dynamic and competitive U.S. wireless marketplace, which is an important fact for U.S. regulators to recognize."

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I did read the article. I actually read it from multiple sites as to get many perspectives on the matter. They all seem to share the same theme that AT&T isn't happy at all with the amount of spectrum sprint, a now Japanese majority owned company will have control of in the American wireless industry if it gains control of clearwire's spectrum holdings.

 

 

 

"Watch out, Sprint (S): AT&T (T) hasn’t forgotten the role you played in wrecking its proposed merger with T-Mobile. And now that Sprint is engaging in a series of mergers of its own, first with Japanese wireless company Softbank (SFTBY) and then with longtime partner Clearwire (CLWR), AT&T has decided to complain loudly about its rival’s newfound love for industry consolidation. As The Hill reports, AT&T spokesman Brad Burns warned this week that “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.” Burns went on to say that AT&T expected that Sprint’s newfound position of spectrum dominance “will be fully explored in the regulatory review process.”

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Hey look, it's an AT&T kvetch party. My response: "Here, take the 700 lower B spectrum that you want to buy from anyone and everyone and have a nice life." AT&T is just afraid that a cash infusion from anywhere into Sprint might allow Sprint to deploy a network with the same coverage in metro areas...on LTE in PCS and maybe BRS...as AT&T has with LTE on 700MHz. This makes AT&T look bad, because AT&T's network will be slower, with not as much investment put into it (remember the signal travel differential between 700 and PCS). Oh, and they're still store about not being able to buy the smallest truly nationwide, truly competitive wireless carrier (metroPCS and CricKet don't count on this scale).

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Clearwire should sell half of the spectrum to Sprint and then Sprint should cut its ties with Clearwire once and for all. Yes, I am bitter that San Diego was to be one of the launch launch cities for XOHM (wimax) before the whole Clearwire fiasco. Nothing would make me happier than to see Clearwire in bankruptcy and Sprint with half the spectrum for itself.

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I did read the article. I actually read it from multiple sites as to get many perspectives on the matter. They all seem to share the same theme that AT&T isn't happy at all with the amount of spectrum sprint, a now Japanese majority owned company will have control of in the American wireless industry if it gains control of clearwire's spectrum holdings.

 

 

 

"Watch out, Sprint (S): AT&T (T) hasn’t forgotten the role you played in wrecking its proposed merger with T-Mobile. And now that Sprint is engaging in a series of mergers of its own, first with Japanese wireless company Softbank (SFTBY) and then with longtime partner Clearwire (CLWR), AT&T has decided to complain loudly about its rival’s newfound love for industry consolidation. As The Hill reports, AT&T spokesman Brad Burns warned this week that “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.” Burns went on to say that AT&T expected that Sprint’s newfound position of spectrum dominance “will be fully explored in the regulatory review process.”

 

That's just the way the media is spinning the story. For example, in the story you've quoted, they completely gloss over the last sentence, which completely contradicts their spin, as I pointed out in my post. It's less about Sprint/Softbank than it is about just getting the FCC to back off. I don't think AT&T cares either way whether or not the deal goes through. If it doesn't, then great; Sprint just gets weaker in comparison. If the deal does go through, then AT&T gets to rub it in the FCC's face the next time the FCC has a problem with AT&T's business practices. Either way, AT&T wins in some way.

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Clearwire should sell half of the spectrum to Sprint and then Sprint should cut its ties with Clearwire once and for all. Yes, I am bitter that San Diego was to be one of the launch launch cities for XOHM (wimax) before the whole Clearwire fiasco. Nothing would make me happier than to see Clearwire in bankruptcy and Sprint with half the spectrum for itself.

 

This won't fix anything in the end any more so than the way it is now...

 

Sent from my EVO using Tapatalk 2

 

 

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AT&T definitely cares about Sprint/SoftBank. They are scared. Financial limitations are what kept Sprint from being competitive with the duopoly. AT&T knows that previous hindrance is being removed.

 

Robert via Nexus 7 using Forum Runner

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AT&T definitely cares about Sprint/SoftBank. They are scared. Financial limitations are what kept Sprint from being competitive with the duopoly. AT&T knows that previous hindrance is being removed.

 

Robert via Nexus 7 using Forum Runner

 

That's true, but if the duopoly is removed and balance is restored, then AT&T will be less restricted in future acquisitions. So they may lose ground in the beginning, but the level playing field works both ways. Yeah, they may have to try harder to compete and expand, but they're more likely to obtain the necessary resources to do so.

 

Just about anything could happen for AT&T if the buyout goes through. They may lose their competitive advantage for good. They may stumble but regain traction. They may be able to swing future FCC decisions in their favor and gain ground not only on Sprint but on Verizon as well. AT&T knows this, as they said in their press release, "This is one more example of a very dynamic and competitive U.S. wireless marketplace, which is an important fact for U.S. regulators to recognize." I don't think AT&T are so much "scared" as they are anxious to see how this plays out and apprehensive of possible consequences. They are cautious but assessing their possible advantages in the situation. They could be planning to convince the FCC to redistribute (or whatever would happen) Clearwire spectrum in the wake of the buyout, especially if Clearwire or their spectrum becomes a major factor in the deal. I wouldn't it put anything past AT&T at this point. I'm sure AT&T can afford very clever attorneys should AT&T need them.

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That's true' date=' but if the duopoly is removed and balance is restored, then AT&T will be less restricted in future acquisitions. So they may lose ground in the beginning, but the level playing field works both ways. Yeah, they may have to try harder to compete and expand, but they're more likely to obtain the necessary resources to do so.

 

Just about anything could happen for AT&T if the buyout goes through. They may lose their competitive advantage for good. They may stumble but regain traction. They may be able to swing future FCC decisions in their favor and gain ground not only on Sprint but on Verizon as well. AT&T knows this, as they said in their press release, "This is one more example of a very dynamic and competitive U.S. wireless marketplace, which is an important fact for U.S. regulators to recognize." I don't think AT&T are so much "scared" as they are anxious to see how this plays out and apprehensive of possible consequences. They are cautious but assessing their possible advantages in the situation. They could be planning to convince the FCC to redistribute (or whatever would happen) Clearwire spectrum in the wake of the buyout, especially if Clearwire or their spectrum becomes a major factor in the deal. I wouldn't it put anything past AT&T at this point. I'm sure AT&T can afford very clever attorneys should AT&T need them.[/quote']

 

This is the silver lining in the long term for AT&T. That they will have the ability to perhaps acquire more carriers or spectrum. But if Sprint grows, it will not be at a frenetic pace. So it will take some time for the apple cart to be redistributed enough for that to be a factor.

 

I don't think there is any chance that the Obama FCC would require Clearwire to divest any spectrum. They seem to want viable competition for the duopoly. However, with a Romney FCC, I have no idea how they would come down. Bush was so closely connected to SBC/AT&T, that they probably could get anything they wanted. However, I have no idea what to expect from a Romney FCC at all.

 

Robert via Nexus 7 using Forum Runner

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I'm concerned how this election will play out competition-wise in the wireless market. If either of the duopoly companies lined anyone's pockets, it could sway enough power to end monopolistic restrictions set in place in 1983, and we could see consolidation at a tremendous rate, and at&t and verizon could merge to form a super carrier to bring Sprint & T-Mobile/MetroPCS to their knees. If that were to happen, innovation would stop, and wireless networks would crumble from lack of proper repair, and there would nothing anyone could do about it. Then rate plans would sky-rocket out of this world.

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I'm concerned how this election will play out competition-wise in the wireless market. If either of the duopoly companies lined anyone's pockets, it could sway enough power to end monopolistic restrictions set in place in 1983, and we could see consolidation at a tremendous rate, and at&t and verizon could merge to form a super carrier to bring Sprint & T-Mobile/MetroPCS to their knees. If that were to happen, innovation would stop, and wireless networks would crumble from lack of proper repair, and there would nothing anyone could do about it. Then rate plans would sky-rocket out of this world.

 

If i'm not mistaken... ATT and Vz have lobbyists in both republican and democratic circles.

 

Yep just checked it up.

 

http://www.opensecrets.org/lobby/clientsum.php?id=D000000076&year=2012

 

$223k to Romney and $180k to Obama, $100k to boehner and some other R's / D.

 

I would say the att is hedging bets on both sides rather than one. I would say that the rest of the telecoms are buying into both camps as well. No one wants to be the loser than all ins to one side who loses and thus loses power.

 

I'd probably say that the status quo will remain mainly the same.

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