After being sued by
Sprint Nextel Corp.
DISH Network Corp.
) seems to have completely lost its chances of acquiring
) as the former has raised its bid for Clearwire's shares by
nearly 47% to $5 per share, thereby outpacing DISH Network's
$4.40 per share offer.
CLEARWIRE CORP (CLWR): Free Stock Analysis
DISH NETWORK CP (DISH): Free Stock Analysis
SPRINT NEXTEL (S): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
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The revised bid has also earned strong support from the special
committee and the board of directors of Clearwire. In order to
consider the potential of the new offer, they the board decided
to hold a Special Meeting of Stockholders on Jul 8 after
canceling the same on Jun 24.
At present, Sprint holds 50.8% of Clearwire stakes, so by
acquiring the remaining shares for nearly $14 billion (inclusive
of enterprise value) the company will not only achieve full
complete control over Clearwire but will also gain access to its
2.5 GHz spectrum portfolio, hence allowing Sprint to solve its
Likewise, Clearwire requires huge cash to rollout 4GLTE services
across its footprint. Thus, selling out its entire stake to its
parent firm will address both the issues (shortage of cash and
better marketing support from Sprint).
On the other hand, DISH Network will be the ultimate loser if it
fails to win the deal, as the company is trying to utilize its
Clearwire's huge spectrum portfolio in order to set up wireless
network across the U.S. So, by acquiring the 2.5 GHz Clearwire
airwaves, DISH Network can easily deliver huge HD movie content
to its subscribers as the 2.5 GHz band of spectrum is generally
suitable for transferring huge data in densely populated areas.
Moreover, it can also offer triple-play services to its
subscribers just like the other carriers like
) and Verizon Wireless, thereby reducing competition.
On the flipside, we remain concerned about Sprint's debt position
as the company exited the first quarter of 2013 with $16.7
billion of debt. So, the acquisition of Clearwire will further
raise the company's debt position.
Currently, Sprint has a Zacks Rank #3 (Hold).