Dish trumps Sprint’s offer for Clearwire with $2.3 billion bid

MERIDAN, Col., Wed Jan 9, 2013 — Dish Network put in a bid for Clearwire Corp. on Tuesday that trumped Sprint Nextel’s $2.2 billion offer, setting the stage for a takeover battle for the wireless service provider that owns crucial mobile spectrum.

Dish’s $2.28 billion offer appeared to affirm the satellite television provider’s ambitious plan to buy its way into the wireless services industry, on which it has already spent $3 billion acquiring much-needed capacity.

Dish’s straight-talking chairman Charlie Ergen says he wants to enter the mobile broadband market, and one way of doing it is to partner with another operator. But some analysts have speculated that Ergen is amassing spectrum — an increasingly valuable commodity as use of media-consuming mobile devices such as tablets intensifies — to flip it for a handsome profit.

The success of his latest move hinges on a number of conditions, not least of which is approval by wireless carrier Sprint, the No.3 U.S. carrier that owns just over 50 percent of Clearwire and is also keen to buy up the rest of the company.

Clearwire on Tuesday made it clear that the Dish proposal of $3.30 per share — surpassing Sprint’s $2.97 offer — was only a preliminary indication of interest and subject to a number of uncertainties, conditions and approvals.

Significantly, it said it had not yet drawn on financing pledged by Sprint as part of the carrier’s acquisition agreement, to allow it to consider Dish’s proposal.

Clearwire, Sprint set up $120 million breakup fee

OVERLAND PARK, Kan., Tue Dec 18, 2012 — Sprint Corp. promised to pay Clearwire Corp. a $120 million breakup fee if its $2.2 billion purchase of roughly half of the smaller wireless service provider does not go ahead.

At the same time, Clearwire said on Tuesday it agreed to a “no-shop” provision, meaning it cannot seek other offers but could consider unsolicited offers.

Clearwire and Sprint, its majority owner, announced details of their merger agreement in a regulatory filing the day after Sprint agreed buy out the rest of Clearwire for $2.97 per share.

Clearwire shares traded below the offer price at $2.86, down 5 cents or 1.7 percent on the Nasdaq. Sprint was off 9 cents, or 1.6 percent, at $5.47 on the New York Stock Exchange.

Some shareholders said they were disappointed by the price, which requires approval from a majority of Clearwire’s minority shareholders. While one shareholder is looking for support for a class action lawsuit against the deal, another held out hope for a higher bid.

Clearwire’s chief executive said Monday that Sprint’s offer was its best option, and that Clearwire could face a risk of bankruptcy if that deal is not approved.

The filing said Clearwire would be restricted from providing information to or engaging in discussions or negotiations with third parties regarding an acquisition proposal, subject to certain exceptions.

It did not disclose the exceptions in the filing.

The Clearwire deal is conditional on the sale of a 70 percent stake in Sprint to Japan’s Softbank Corp. for $20 billion. That deal is expected to close around mid-2013.

Sprint would have to pay the breakup fee if the Softbank deal does not happen, if it or Clearwire terminates the agreement, or if their deal has not been consummated on or before Oct. 15, 2013, according to the filing.

Stifel Nicolaus analyst Christopher King said the decline in Clearwire’s shares did not appear to indicate the deal was in any danger of being blocked.

“It’s pretty much a done deal,” King said.

So far, Sprint has support for the deal from Softbank and from at least three Clearwire shareholders owning 13 percent of the company — Intel Corp., Comcast Corp. and cable company Bright House.

Clearwire shares fall on Google stake sale

NEW YORK – Clearwire Corp. shares fell 6 percent on Friday after Google Inc. said it would sell its stake in the company.

An analyst said that Google’s sale of the shares at a discount could be followed by other investors ditching their shares in the wireless service provider.

Google would reap just over $47 million from the sale of the shares, implying a massive loss of $453 million for Google, which invested $500 million in Clearwire in 2008. Google has already taken impairment charges of $443 million in recent years related to the investment.

Cable operators, including Comcast Corp. and Time Warner Cable, also have invested in Clearwire, which is majority owned by Sprint Nextel.

Since the cable operators have recently entered an agreement to resell mobile services from Verizon Wireless, the biggest U.S. mobile service, the concern is that they will also sell their stakes in Clearwire. Before the Verizon deal the cable operators depended on Clearwire as their wholesale provider.

“With no strategic reason to hold Clearwire shares, these ownership stakes could also make their way into the market,” said Evercore analyst Jonathan Schildkraut.

Time Warner Cable said it does not have any immediate plans to sell its stake in Clearwire.

A representative for Comcast were not immediately available for comment.

According to a document filed with regulators on Friday, Google said it would sell the 29.4 million shares it holds in Clearwire for $1.60 per share to Clearwire’s other strategic investors, which include Intel Corp. or on Nasdaq.

Verizon Wireless to pay $3.6 billion for cable spectrum

NEW YORK ― Verizon Wireless plans to pay $3.6 billion for wireless airwaves from a venture of cable companies Comcast Corp., Time Warner Cable Inc. and privately held Bright House Networks.

The deal, which includes the option for cable companies to resell Verizon Wireless service, comes as Verizon’s biggest rival AT&T Inc is facing regulatory opposition for its proposed plan to buy T-Mobile USA.

Both Verizon Wireless and AT&T, the No. 1 and No. 2 U.S. mobile providers, are trying to improve their network capacity to support increased consumer demand for services such as mobile web browsing on devices like tablet computers.

Analysts said it made sense for Verizon to take the chance to get a deal done while AT&T is tied up with efforts to seek approval for its T-Mobile USA deal but some wondered why the cable operators did not wait.

“It looks like a great deal for Verizon,” said Pacific Crest analyst Steve Clement. “You’d think from the cable guys’ perspective if you wait a little longer there’s more bidders — potentially AT&T and maybe T-Mobile USA.”

Comcast said, however, that the deal represented a 64 percent premium over the $2.2 billion price the cable consortium paid in 2006 for the wireless spectrum being sold to Verizon Wireless.

Another analyst saw the development of a reseller deal with Verizon Wireless as a strategy about-face for the cable operators, which compete with Verizon and AT&T in home telephone, Internet and television services.

“The biggest surprise is that it aligns the cable companies with Verizon, one of their fiercest competitors,” said Mizuho analyst Michael Nelson. “The primary reason the cable companies formed this consortium and acquired this spectrum was to compete better with Verizon and AT&T.”

The cable operators already resell wireless services in some markets using the network of Clearwire Corp, their venture with No. 3 U.S. mobile service Sprint Nextel.

Clearwire soars as Sprint eases liquidity concerns

NEW YORK ― Sprint Nextel Corp., the No. 3 U.S. mobile provider, agreed to pay up to $1.6 billion to Clearwire Corp. in the next four years, including a network pact and a potential equity infusion, easing concerns about a liquidity crisis at Clearwire.

Clearwire, for which some investors had bankruptcy fears, saw its shares rise more than 20 percent in morning trade after it said on Thursday that it will be able to make a $237 million debt interest payment due Dec. 1.

The stock had closed up 13 percent the day before after a Reuters report that Sprint was expected to reach a funding agreement for Clearwire.

Wireless service provider Clearwire, which is majority owned by its biggest customer Sprint, last month told the Wall Street Journal that it might skip the interest payment to conserve cash as it needs almost $1 billion in new financing to keep operating and fund a network upgrade.

At the time analysts said the comment was likely a negotiating tactic aimed at forcing Sprint’s hand.

Sprint, which itself recently raised $4 billion from a bond sale, said it would pay Clearwire $926 million for unlimited use of its current wireless network in 2012 and in 2013, after which its payments would depend on how much customers used the service.

In return Clearwire committed to keep that network — based on WiMax technology — up and running at least until 2015.

Sprint would also pay Clearwire up to $350 million in a series of prepayments, over two years at most, for capacity on a high-speed service Clearwire hopes to build using a faster technology known as Long Term Evolution, as long as Clearwire achieves certain network targets by June 2013.

Sprint, which has minority voting rights in Clearwire, also committed to providing more equity funding “in the event of an equity offering.”

If Clearwire raised between $400 million and $700 million in new equity, Sprint said it would participate in the offering on a pro rata basis up to $347 million, consistent with its current voting interest.

Clearwire signs high-speed wireless network deal with Ericsson

NEW YORK ―  Clearwire Corp has chosen Ericsson to take over management of its high-speed wireless network to help it cut costs, the service provider said Wednesday.

The seven-year agreement is similar to an arrangement which Clearwire’s majority owner Sprint Nextel has with Ericsson, causing some analysts to suggest that it might lead to a closer tie between Sprint and Clearwire.

Under the deal, Clearwire said it will transfer 700 of its 3,600 employees to Ericsson, but will continue to own the network.

Clearwire said the agreement will help cut costs, but the company would not disclose details on the financial impact or the terms.

Handing over 700 employees could cut as much as $70 million of Clearwire’s annual expenses, according to Nomura Securities analyst Michael McCormack.

Clearwire’s adoption of a similar network management agreement to Sprint’s could mean that the companies are getting ready for a closer relationship, he said.

“While the optics of further equity investment or eventual consolidation would be likely negative for Sprint shares, we think it is the right decision,” McCormack said.

Sprint and Clearwire, which needs more funding to expand its network, have said that they have been discussing letting Clearwire use Sprint’s wireless towers to expand its service.

Clearwire did not disclose the terms of the Ericsson agreement or how it relates to the Sprint talks.

Clearwire shares were up 5 percent at $4.49 on the Nasdaq on Wednesday morning. Sprint shares were up 1.4 percent at $5.18 on the New York Stock Exchange.