Sprint Nextel Corp.
) has finally inked an agreement to acquire the remaining 50%
) for $2.97 per share. The total purchase price is estimated at
The agreement was approved by Clearwire's board of directors
and is subject to regulatory approvals. The deal also requires
approval of the majority of Clearwire stakeholders other than
Sprint, which already owns 50% of the company's shares. The
acquisition is expected to close by mid-2013, subject to
If the deal materializes, Sprint will gain full rights over
Clearwire. This implies access to Clearwire's radio frequency
spectrum ranging 2.5 GHz, utilized in providing services using 4G
802.16e mobile WiMAX standard.
Apart from this deal, Sprint is also trying to forge a
DISH Network Corp.
) that will enable the latter to offer its own mobile services
using Sprint's network. DISH, the second largest satellite TV
operator, is waiting for the FCC nod to launch a nationwide
high-speed wireless broadband network.
This will enable the company to offer mobile Internet, voice
and video services to its customers using its newly acquired
satellite airwaves from the bankrupt DBSD North America Inc. and
TerreStar Networks Inc.
The agreement, if cleared, would allow Sprint to access DISH
Network's spectrum, which is the most important and scarce
element in deploying a nationwide super-fast LTE network.
Nevertheless, this deal may need an approval from the Japanese
wireless service provider Softbank, which has decided to purchase
a majority stake in Sprint.
In October, it was reported that Sprint was selling its 70%
stake to Japanese cell phone company Softbank Corp. for $20.1
Sprint is in the midst of a multi-billion dollar restructuring
program known as Network Vision. Through this plan, the company
is concentrating on the core Sprint platform, which includes
CDMA, WiMAX and Long-Term Evolution (LTE) technologies, and the
eventual termination of the Nextel platform (iDEN business).
Though the company has enough liquidity to address the growing
costs of network upgrade, iPhone subsidies, debt maturities and
working capital requirements, it needs to bolster its liquidity
position buyouts. The potential transaction would provide Sprint
the financial support to build and improve its competitive
However, the company is also struggling to deal with the loss
of post-paid customers to other industry players such as
Verizon Communications Inc.
). This shrink in subscriber base was primarily due to intense
price competition, ineffective marketing, less favorable network
quality and delay in integration of back-office functions with
its acquired units.
We reaffirm our long-term Neutral recommendation on Sprint.
However, the stock has a Zacks #2 Rank, implying a short-term
(1-3 months) Buy rating.
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
VERIZON COMM (VZ): Free Stock Analysis Report
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