Clearwire Spectrum Auction Looks Like Act of Desperation
News Analysis: T-Mobile and Clearwire have already talked about an equity infusion that Clearwire badly needs, but Sprint isn't happy with that idea any more than it likes a spectrum auction.Clearwire's current attempt to auction off a portion of its massive spectrum holdings may be the company's desperate last effort to find a way to fend off an equity investment by T-Mobile parent Deutsche Telekom. The evidence that all is not well at the wireless service provider starts with the turmoil on Clearwire's board of directors. Late last month, three Sprint Nextel senior officers resigned from the board because of possible anti-trust issues. Furthermore, the company is searching desperately for the money it needs to keep building out of the 4G WiMax network required to support Sprint Nextel.
The problem is that Sprint owns slightly over half of Clearwire. While Sprint doesn't hold a majority of the board seats, it's very clear that as majority owners of the stock, the company has enormous influence. So when Deutsche Telekom came calling with an offer to provide the money necessary to fund Clearwire's build-out in return for an equity position, Sprint was clearly annoyed but powerless to prevent it. But that doesn't mean that it couldn't make its wishes known, and make sure that those wishes got the attention of Clearwire's management.