Stanton Could Broker Mobile Consolidation
With the Sprint executives out of Clearwire and with Stanton elected to replace McCaw along with a standing offer from T-Mobile's parent Deutsche Telekom to provide the investment that Clearwire desperately needs, what's to stand in the way of T-Mobile becoming a major investor in Clearwire to take advantage of Clearwire's spectrum and advanced LTE technology? In a word, Sprint. Inconveniently, Sprint owns over half of Clearwire, and unless Sprint agrees to let Deutsche Telekom invest, then there's nothing that Clearwire's board or its board chairman can do. However, without Clearwire, Sprint seems doomed to have its 4G service languish. While it could build out its own WiMax network, Clearwire has the spectrum and Sprint needs to use that spectrum, which it can't do if the spectrum has been sold off to finance Clearwire's development.Remember Stanton has a long reputation in the telecom industry for "making incredible deals" in the words of analyst Brier Dudley. Enabling Deutsche Telekom to invest in Clearwire doesn't really qualify as an incredible deal, although it would solve that company's financial woes. But there is one more deal that Stanton brushed up against when he was at VoiceStream. If you'll remember, VoiceStream was the GSM spin-off from Sprint when the company decided to switch to CDMA. Stanton already has experience with Sprint, as well as VoiceStream, T-Mobile and Clearwire. He's been on Clearwire's board for a couple of years now, and he certainly knows the details of how the companies interoperate. He probably knows Sprint as well as anyone outside of the company. So maybe the incredible deal that Stanton is getting set to broker is something bigger than an investment into Clearwire. Perhaps it's the whole enchilada-a Deutsche Telecom-sponsored merger of T-Mobile, Clearwire and Sprint into a single company, but perhaps with two operating entities. Perhaps Sprint would handle the CDMA/WiMax end and T-Mobile would operate the GSM/LTE portion. A T-Mobile purchase of Sprint has been rumored for years. Maybe now it's actually starting to happen.
So Sprint is kind of stuck. It either has to change its corporate mind and invest more of its own money into Clearwire or it has to allow another investor to do so, and right now there's only one of those. Sprint is, in a business sense, between a rock and a hard place. But there is a way out.