Sprint owns a majority stake in Clearwire, with cable provider,
Comcast as a minority shareholder. Time Warner Cable and Bright House
Networks are other companies that have an interest in Clearwire.
Clearwire has reported that it needs between $750 million and $900
million in new funding to maintain and expand its WiMax networks. WiMax
powers Sprint's 4G network and a fresh investment would help it to add
LTE technology, and offer both services to wireless carriers.
This comes after Sprint struck up a deal with LightSquared last month.
The agreement will see Sprint host LightSquare's LTE network for 15
years. Sprint would also be a wholesaler of the wireless spectrum to
other carrier the same way it purchases spectrum from Clearwire.
If this is the case, Sprint's investment in Clearwire may not
materialize. Sources who requested to be unnamed said that talks were
still in the initial stages and that there was a "low probability" of
anything coming to fruition soon.
Clearwire is in desperate need of funding and having a majority interest
in Clearwire which might force Sprint to put funds into it. Sprint and
its partners in Clearwire have not always been on the same page
regarding Clearwire. Furthermore, cable companies have no need for
mobile spectrum which could see a joint funding effort fall through.
However, Cox Communications and Cablevision Systems Corp. were also
involved in the talks and are reportedly interested in acquiring a stake
in Clearwire themselves. Cable operators have not successfully been able
to utilize their mobile spectrum and monetize it.
Sprint's deal with LightSquared is also contingent on the company
receiving FCC approval. LightSquared has had issues over its network
interfering with GPS communications and this could stall the LTE
Sprint could make a move to acquire a further share in Clearwire and
speculation of this happening is rife. This would allow Sprint to play a
bigger role in Clearwire's management. Sprint and Clearwire have also
been in disagreement about the company's future but an acquisition by
Sprint would give it more control.
Sources also reported that any deal with Clearwire will depend on the
AT&T – T-Mobile merger. Sprint has spoken out against AT&T's acquisition
saying that it would hurt competition. Sprint's acquisition of Clearwire
will certainly help it better compete with AT&T (T : 29.07, -0.365) and
Verizon (VZ : 35.79, -0.68), and could be a necessity if the AT&T merger
The demand for spectrum is set to rise as more bandwidth intensive
devices hit the markets. Sprint could be holding valuable assets in
Clearwire and LightSquared. If Sprint is able to successfully able to
resell its spectrum in these companies, it could turn its luck around.