bigsnake49

This from Tim Farrar's blog of 12/14/2012: Some have asked me what is Sprint and Softbank’s alternative to buying Clearwire. My view is that Sprint will save its money for buying PCS spectrum, where its need is far more urgent. In particular, Sprint is going to have to pay $1B+ to buy the 10MHz H block in the auction next year, and if DISH is left with no alternative other than to sell out to AT&T, Sprint would expect to pick up another 10-20MHz of PCS spectrum that AT&T would need to sell in order to get a DISH deal approved by the FCC. http://blog.tmfassociates.com/

The ball is in his court. Now he might elect to go with T-Mobile, but I think his best bet is Sprint. Now, he could buy Clearwire's network and some spectrum from Sprint for a nice chunk of change and see if he can make a go of it by himself.

It will probably cost close to a billion for nationwide spectrum, according to some of the estimates I have seen.

Some people around here thing that Sprint won't bid on PCS-H. I think that they will, and will also try and secure additional A-F spectrum. They recognize that PCS is their bread and butter band, a great compromise between cellular and >2.5 GHz spectrum. I just don't see Clearwire's spectrum as valuable as some other people seem to think. Unless they plan to do something else with it in addition to mobile. I just did not see the need for Sprint to spend close to $8B.

Dish has, in addition to their AWS-4 spectrum, 6MHz of 700MHz spectrum. They can definitely offer some decent speeds on their 20+15MHz of AWS-4 and 6MHz of 700MHz.

I know how they got there. I still think this has something to do with Dish. They might sell Clearwire's network and some of the spectrum to Dish. Other people think that Dish is making a play to be acquired by AT&T whole. Or sell it's spectrum to AT&T.

It depends on the buffering. If you're streaming radio or video, you might have dropoffs.

They don't need this spectrum either. If they were to concentrate on PCS-H and/or getting some divestitures from T-Mobile/Metro and maybe acquiring Leap, it would be a lot cheaper. They did not have to pay $7.7B for Clearwire, just to use them for hotspots. So either they have other plans, such as using them for fixed broadband as well, or this deal makes absolutely no sense. The 2.6GHz band is well suited for dense urban areas like in Europe or China or NYC, but a total waste for the suburban/rural US.

Ding dong, the witch is dead:).

It does and it doesn't. If Sprint has a solid 30MHz of A-F in all of its markets It does and it doesn't. I am worried about handoffs between 2.6GHz cell and the PCS G/800Mhz. I think you need to minimize handoffs to minimize drops. If Sprint can get their hands on enough spectrum in the A-F bands to have a solid 30MHz in all their markets, then they have less need for PCS-H. I just don't think that Sprint is buying Clearwire for the spectrum. They are buying them to sell them to Dish or DirectTV. They just did not want Dish to get them for cheap.

The nightmare from Bellevue is finally over. Here is the full text of the release: Sprint to Acquire 100 Percent Ownership of Clearwire for $2.97 per Share Transaction provides Clearwire shareholders with certain, fair and attractive value Sprint uniquely positioned to leverage Clearwire's 2.5 GHz spectrum assets Transaction strengthens Sprint's position and increases competitiveness in the U.S. wireless industry Interim funding allows Clearwire to continue LTE build-out and complement Sprint's LTE deployment OVERLAND PARK, Kan. & BELLEVUE, Wash. (BUSINESS WIRE), December 17, 2012 - Sprint (NYSE:S) today announced that it has entered into a definitive agreement to acquire the approximately 50 percent stake in Clearwire (NASDAQ: CLWR) it does not currently own for $2.97 per share, equating to a total payment to Clearwire shareholders, other than Sprint, of $2.2 billion. This transaction results in a total Clearwire enterprise value of approximately $10 billion, including net debt and spectrum lease obligations of $5.5 billion. The transaction consideration represents a 128 percent premium to Clearwire's closing share price the day before the Sprint-SoftBank discussions were first confirmed in the marketplace on October 11, with Clearwire speculated to be a part of that transaction; and, a 40 percent premium to the closing price the day before receipt of Sprint's initial $2.60 per share non-binding indication of interest on November 21. Clearwire's spectrum, when combined with Sprint's, will provide Sprint with an enhanced spectrum portfolio that will strengthen its position and increase competitiveness in the U.S. wireless industry. Sprint's Network Vision architecture should allow for better strategic alignment and the full utilization and integration of Clearwire's complementary 2.5 GHz spectrum assets, while achieving operational efficiencies and improved service for customers as the spectrum and network is migrated to LTE standards. Sprint CEO Dan Hesse said, "Today's transaction marks yet another significant step in Sprint's improved competitive position and ability to offer customers better products, more choices and better services. Sprint is uniquely positioned to maximize the value of Clearwire's spectrum and efficiently deploy it to increase Sprint's network capacity. We believe this transaction, particularly when leveraged with our SoftBank relationship, is further validation of our strategy and allows Sprint to control its network destiny." The transaction was unanimously approved by Clearwire's board of directors upon the unanimous recommendation of a special committee of the Clearwire board consisting of disinterested directors not appointed by Sprint. In addition, Clearwire has received commitments from Comcast Corp., Intel Corp and Bright House Networks LLC, who collectively own approximately 13 percent of Clearwire's voting shares, to vote their shares in support of the transaction. SoftBank has provided its consent to the transaction, as required under the terms of its recently announced merger agreement with Sprint. Clearwire CEO and President Erik Prusch said, "Our board of directors has been reviewing available strategic alternatives over the course of the last two years. In evaluating available alternatives, a special committee conducted a careful and rigorous process, and based on the committee's recommendation, our board unanimously determined that this transaction, which delivers certain and attractive value for our shareholders, is the best path forward." In connection with the transaction, Clearwire and Sprint have entered into agreements that provide up to $800 million of additional financing for Clearwire in the form of exchangeable notes, which will be exchangeable under certain conditions for Clearwire common stock at $1.50 per share, subject to adjustment under certain conditions. Under the financing agreements, Sprint has agreed to purchase $80 million of exchangeable notes per month for up to ten months beginning in January, 2013, with some of the monthly purchases subject to certain funding conditions, including conditions relating to the approval of the proposed merger by Clearwire's shareholders and a network build out plan. The transaction is subject to customary closing conditions, including regulatory approvals and the approval of Clearwire's stockholders, including the approval of a majority of Clearwire stockholders not affiliated with Sprint or SoftBank. The closing of the transaction is also contingent on the consummation of Sprint's previously announced transaction with SoftBank. The Clearwire and SoftBank transactions are expected to close mid-2013. Citigroup Global Markets Inc. acted as financial advisor to Sprint and Skadden, Arps, Slate, Meagher & Flom LLP and King & Spalding LLP acted as counsel to Sprint. The Raine Group acted as financial advisor to SoftBank Corp. and Morrison Foerster LLP acted as counsel to SoftBank. Evercore Partners acted as financial advisor and Kirkland & Ellis LLP acted as counsel to Clearwire. Centerview Partners acted as financial advisor and Simpson Thacher & Bartlett LLP and Richards, Layton & Finger, P.A. acted as counsel to Clearwire's special committee. Blackstone Advisory Partners L.P. advised Clearwire on restructuring matters. Credit Suisse acted as financial advisor and Gibson Dunn & Crutcher LLP acted as counsel to Intel.

Tim Farrar, in his blog, always has very interesting analysis of this offer. Basically what he thinks is that Sprint is not really interested in Clearwire's spectrum. It's doing it to block a rival offer from Dish. He opines that Sprint is much more interested in PCS H and any PCS spectrum that a potential acquisition of Dish's spectrum by AT&T might force them to divest. For more details: http://tmfassociates.com/blog/2012/12/13/its-complicated/

You can blame McCaw for being headstrong and non-cooperative with Sprint.

OK, how does Sprint integrate Clearwire into it's network? I know that they can implement LTE-TDD under the NV project. What do they do with Clearwire's network? Do they dismantle it after couple of years? I hope they don't keep it forever. What about leases?

I also don't like the timing of this, but I like the fact that they're cleaning up their messes. First, they get rid of IDEN, then they get rid of Clearwire. Next thing you know, they might get some spectrum from Metro/T-Mobile and then bid for PCS-H.

I wonder how much this is driven by Softbank's desire to build up the TDD-LTE device ecosystem for the 2.6GHz band.

So it pays $2.1B for the 49% it does not own and it is assuming the debt, I presume, which is about $5B, so basically paying $7.1B in total? Pretty expensive for what it offers. There's something else in the works and it involves Dish. I feel it in my bones, I tell you!

I don't think a consortium like that will be that bad. They're really not going to be ISPs to make money from the connectivity. They are there to make money from content or advertising or selling devices. And they might be the only ones that would embrace video on demand, ala carte pricing.

Talking abt Dish, I wonder how long before they get acquired by somebody like Apple or Google or Microsoft, if only for the rights to content. Or why not have all three companies get together and build out a fiber to the home network. I think that between the three of them they have a few billion dollars. They need to do something to put the fear of god in either the content companies or the ISPs

Thanks for that analysis. I think that social networking might have increased the utilization somewhat, but smartphones and tablets are still media consumption devices. I think I have linked an article in another thread about using spectrum in full duplex without the need for FDD or guard slots in TDD, that will allow full utilization of a channel no matter the type of traffic and will allow for full dynamic utilization.

Well there is a block between 2572 and 2618 that sits unused. Also the uplink would be mostly wasted.

Dish Network Corp. (Nasdaq: DISH) got what it wanted Tuesday: The OK from the Federal Communications Commission (FCC) to use some spectrum for terrestrial mobile broadband without also having to support satellite links. But the service provider was non-committal about what it will now do about that. Dish, claiming it wanted to build out a wireless network, originally sought a waiver to lift the satellite requirement on its Advanced Wireless Services (AWS)-4 spectrum. The FCC declined and went into a formal rulemaking process, causing Dish to vent about maybe selling the spectrum or partnering with a mobile carrier. The FCC was slated to vote on the matter Wednesday afternoon but announced Tuesday that the item had passed unanimously. The FCC, in another 5-0 vote, also agreed to set the stage for a 2013 auction of the 10MHz H block. ............................ Sprint VP of Government Affairs Larry Krevor called the FCC rules for the AWS-4 spectrum "balanced and equitable," and that the company is 'especially encouraged'" about the coming H block auction. http://www.lightreading.com/document.asp?doc_id=227857&site=lr_cable&

Why would they waste the spectrum for FDD? There's not a lot of uplink traffic.

Or could it be that Sprint and Dish swap spectrum and Dish gets Clearwire's network for cash, but in order to do that Sprint has to buy Clearwire?

I remember that Qualcomm has said that they can only support 3 of those bands at any one time because of the need to support preamps and filters for each of the bands. Yes the WTR1605L will support a total of 7 LTE bands but only three of them at at time.