Rating agency Standard & Poor's (S&P) has announced
), which offers Wi-Max services in the U.S. will not be
immediately affected by Japan-based Softbank's 70% acquisition of
) for about $20.1 billion. The rating firm is maintaining
Clearwire's CCC rating along with a Developing outlook despite
Sprint-Nextel being its largest shareholder with a 48.1 % stake.
Clearwire has formed a venture combining its infrastructure
together with the wireless network of Sprint to install TDD-LTE
4G network by the beginning of 2013 and will cover 5,000 LTE
footprints by first half of 2013. S&P believes that if
Softbank acquires Clearwire it will lead to a reduction of the
latter's handset related costs as Clearwire is using Time
Division (TD) LTE duplex technology in the 2.5 GHz spectrum band
- the same technology that Softbank uses in Japan.
Softbank has no immediate plans to take over Clearwire until
the Sprint transaction ends. However, if it indeed makes a move
the deal will be beneficial for Clearwire as it will get the
financial resources to modernize its network which it was unable
to get from Sprint because of its huge debt burden.
On the flip side, Sprint will get access to Clearwire's
additional spectrum which will put the third largest U.S. carrier
in a much stronger position as compared to
Verizon Communications Inc.
The Bellevue, Washington based Clearwire will also receive a
series of prepayments amounting $350 million from Sprint over a
two-year period if the company meets certain LTE deployment
target by June 2013. We believe such series of prepayments
from Sprint coupled with a huge cash base of $1.2 billion and
availability of huge wireless spectrum license will continue to
lend support to the company to meet its future goal.
Currently, Clearwire Corporation has a Zacks #3 Rank, implying
a short-term Hold rating on the stock.
CLEARWIRE CORP (CLWR): Free Stock Analysis
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