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    Sprint Buying Majority Stake in Clearwire, AT&T Concerned

    Written by

    Michelle Maisto
    Published October 18, 2012
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      Sprint and partner Clearwire have filed paperwork with the U.S. Securities and Exchange Commission that seeks to change the terms of their arrangement and give Sprint the majority share of the wireless company, the Associated Press first reported Oct. 18.

      Sprint would like to buy Clearwire co-founder Craig McCaw’s stake in the company for $100 million, which would push Sprint’s 48.1 percent to a majority 50.3 percent stake. McCaw retired from his role as chairman in 2010.

      That Sprint should suddenly be able to pony up $100 million is no surprise. On Oct. 15, it announced that it had agreed to sell a 70 percent share of the carrier to Softbank, Japan’s third-largest wireless carrier, for $20.1 billion.

      Through Clearwire and its WiMax-based network, Sprint was the first tier-one carrier to offer 4G; though executives had said that they expected Long Term Evolution (LTE) to ultimately become the more popular 4G flavor. Sprint has since begun rolling out an LTE network, and Clearwire has expressed a desire to do so, though funding has been an issue.

      On its Website, Clearwire said it “has more spectrum than anyone.”

      Sprint’s agreement with Softbank doesn’t require Sprint to “take any actions involving Clearwire other than those set forth in agreements Sprint has previously entered into,” according to an Oct. 15 statement from Sprint and Softbank.

      Still, the deal has given AT&T pause about the control that Softbank, a foreign company, would have over Clearwire.

      AT&T Vice President Brad Burns released a statement Oct. 18 saying:

      Softbank’s acquisition of Sprint and the control it gains over Clearwire will give one of Japan’s largest wireless companies control of significantly more U.S. wireless spectrum than any other company. We expect that fact and others will be fully explored in the regulatory review process.

      This is one more example of a very dynamic and competitive U.S. wireless marketplace, which is an important fact for U.S. regulators to recognize.

      Clearwire’s spectrum is incredibly valuable, and incredibly valuable to Sprint, and it’s been said that a buyout of Clearwire is necessary for Sprint’s long-term success.

      According to Bloomberg, Sprint recently also approached Comcast and Intel, two companies that also own stakes in Clearwire, about purchasing their shares. According to people familiar with the situation, however, Sprint “made little headway.”

      AT&T has been working to grow its LTE network, which still lags behind that of Verizon Wireless. AT&T’s challenge, in part, is a network created out of cobbled-together portions of spectrum. It moved closer to remedying this issue Oct. 17, when the Federal Communications Commission approved a deal AT&T created with satellite radio company Sirius, involving Wireless Communication Services (WCS) spectrum. Despite the industry’s tremendous need for spectrum, WCS has been little-used, due to disruptions it can cause to satellite communications.

      AT&T figured out how it might make use of WCS and has been gradually buying up portions. As a result of the FCC’s vote of approval, it will begin building out an LTE network on the spectrum and expects to begin offering it in 2015.

      “AT&T took real risks to develop this underutilized band and is committed to devoting the resources necessary to unlock its full potential,” Joan Marsh, AT&T vice president of Federal Regulatory, said in an Oct. 17 post on the AT&T public policy blog.

      Michelle Maisto
      Michelle Maisto
      Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University.

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