DISH Raises Bid for Clearwire - Analyst Blog

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The battle for controlling the remaining 49% stake of the 4G wireless wholesaler, Clearwire Corp. ( CLWR ) is becoming increasingly competitive. The battle for Clearwire started long back in Dec 2012, when Sprint Nextel Corp. ( S ), the 51% shareholder of Clearwire, proposed a $2.97 per share bid to acquire the remaining 49%. In Jan 2013, satellite TV operator, DISH Network Corp. ( DISH ) offered a counter bid of $3.30 per share to acquire the remaining 49% stake of Clearwire.

Clearwire shareholders will vote on May 31, 2013 to take a final decision about the two bids. In May 21, 2013, Sprint hiked its bid to $3.40 per share to ensure a favorable voting. However, yesterday, DISH raised its bid to a substantial $4.40 per share of Clearwire, which is 29% higher than that of the revised bid of Sprint.

DISH's proposal has a total consideration of $6.5 billion and includes several conditions. Per the conditions, the company must get at least 25% of Clearwire's controlling stake to nominate board members. It will pay $2.2 billion to get a 24% stake of Clearwire's 2.66 GHz spectrum. Clearwire has to build and manage a wireless network for DISH.

DISH's new bid contains another major issue. At present, Clearwire is reeling under a financing deal with Sprint in the form of convertible notes with a coupon rate of a mere 1% per annum. DISH has decided to pay an additional $800 million to Clearwire in order to terminate its financing deal with Sprint but Clearwire should allow DISH to convert those notes into common outstanding shares of Clearwire at a ratio of $2.50 per share.

In Apr 2013, ina major strategic move, DISH made a counter bid of $25.5 million to acquire Sprint Nextel. Softbank of Japan had earlier made a $20.1 billion bid for Sprint Nextel. DISH network is trying hard to either acquire or collaborate with an established wireless operator to build a nationwide viable wireless network.

In 2012, DISH purchased 2 slots of the 40 MHz S-band wireless spectrum fromTerreStar Networks Inc. and DBSD North America Inc. for a consideration of $2.9 billion. A recent Bloomberg report stated that DISH has made an offer of $2 billion to purchase the wireless frequencies of the bankrupt wireless wholesaler LightSquared Inc.

Just 3 days ago, DISH executed a Letter of Intent with regional wireless network operator, NTELOS Holdings Corp. ( NTLS ), to deploy a fixed-mobile broadband network to offer high-speed Internet service to areas served by NTELOS. DISH Network currently has a Zacks Rank #3 (Hold).

CLEARWIRE CORP (CLWR): Free Stock Analysis Report

DISH NETWORK CP (DISH): Free Stock Analysis Report

NTELOS HOLDINGS (NTLS): Free Stock Analysis Report

SPRINT NEXTEL (S): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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