FCC Expected to Let Sprint Keep All of Clearwire's Spectrum
The Federal Communications Commission (FCC) intends to approve Sprint's purchase of 4G provider Clearwire, and allow Sprint to keep all the spectrum that Clearwire will bring with it, Reuters reported June 27, citing two sources familiar with the matter.
Crest Financial, one of Clearwire's largest minority stakeholders, asked the FCC to require Sprint to sell off some of the spectrum as a condition of approving the sale.
It was rumored that the FCC could vote on the matter as soon as Friday, July 28, If commissioners were able to sift, in a timely manner, through the 70-page report filed on the deal, said the report.
On Thursday, it added, "Acting Chairwoman Mignon Clyburn said she has circulated a draft order recommending the approval of the deals to the FCC's other two commissioners."
Sprint, which is also deep into a merger deal with Japanese carrier Softbank—a deal now only awaiting the approval of the FCC—in December announced a deal with Clearwire to buy the approximately 50 percent of the company that it doesn't own.
At the time, Sprint's accepting bid was $2.97 a share—a price that some analysts on a Dec. 17, 2012, conference call characterized as overly generous, given Clearwire's dire financial position.
In January, Dish Network tried to break up the deal, offering Clearwire $3.30 per share.
What followed was a game of back and forth, with Sprint modestly raising its bet and Dish doing the same with more gusto, seeming to dare Sprint to continue climbing higher.
By June, Dish's offer was up to $4.40 per share, and on June 12, Clearwire's board of directors unanimously recommended that shareholders vote in favor of the deal.
Sprint responded by filing a lawsuit against Dish and Clearwire, stating the terms of the deal violated corporate laws in Delaware, as well as Clearwire shareholders' Equity Holders Agreement (EHA), and further that Dish knowingly was entering a bad deal and had "everything to gain" from Clearwire failing.
It was around this time that Crest Financial made its displeasure known, writing to the Clearwire board June 11 that the Dish deal is "both actionable and superior in every way to [Sprint's] offer."
Sprint then raised its offer to $5 per share, causing Clearwire's board of directors to have a change of heart and, based on the unanimous recommendation of a special committee, to instead recommend shareholders vote for the Sprint deal.
On June 25, Dish withdrew its offer for Clearwire, stating "among other reasons," the Clearwire board's change in recommendation.
While Sprint's deal with Softbank isn't contingent on the approval of Sprint's deal with Clearwire, the Japanese carrier—which will receive a 78 percent stake in the U.S. carrier, making the deal the largest-ever U.S. acquisition by a Japanese company—is certainly hoping for it. Clearwire's considerable spectrum holdings will have a great impact on the new Sprint's ability to compete with Verizon Wireless and AT&T, the current market leaders.
According to Reuters, Clearwire and Sprint said they were "very appreciative of the chairwoman's action."