Sprint Proposes $2.1 Billion Buyout of Clearwire

Sprint filed paperwork with the SEC proposing a $2.1 billion buyout of Clearwire that will finally give it control over major spectrum.

Sprint is reaching into Softbank's deep pockets to officially advance its 4G efforts and more aggressively compete against rivals Verizon Wireless and AT&T, and even smaller carrier T-Mobile, which will soon be emboldened by its acquisition of MetroPCS.

As rumors anticipated, on Dec. 12 Sprint filed paperwork with the Securities and Exchange Commission, sharing plans to purchase the 49 percent of Clearwire that it doesn't already own for $2.90 a share, or $2.1 billion.

In October, Sprint sold 70 percent of the carrier to Japan-based Softbank for $12.1 billion. Days later, flush with spending money, it purchased additional shares of Clearwire from co-founder Craig McCaw. The purchase gave Sprint a majority portion, but still not the ability to control the spectrum-rich company as it might have liked—and as full ownership will. According to the Clearwire site, it has "more spectrum than anyone."

The Wall Street Journal described the full purchase of Clearwire as enabling Sprint to "clear up a tangled ownership structure" that has prevented Sprint from having control over key decisions at its major partner. The "dysfunctional relationship" between the two, and need for access to Clearwire's significant spectrum holdings it added, had become notable issues in its deal with Softbank.

Announcing Sprint's agreement with Softbank Oct. 15, Sprint CEO Dan Hesse said in statement that he and his team were "excited to work with Softbank to learn from their successful deployment of LTE in Japan as we build out our advanced LTE network, improve the customer experience and continue the turnaround of our operations."

Sprint was one of a handful of companies that contributed to the creation of Clearwire in 2008, and using Clearwire's WiMax technology, Sprint was the first tier-one carrier to market with 4G. Ultimately, however, Long Term Evolution (LTE) proved to be the more popular 4G technology, and as Clearwire struggled, Google and other founding companies sold off their shares at a loss.

Sprint has committed to rolling out LTE alongside its WiMax network, and Clearwire has stated similar intentions though made less progress. With full ownership, Sprint is likely to accelerate its rollout, which is well behind the efforts of Verizon and AT&T. The latter currently covers 285 million people in 113 markets and Verizon covers 441 cities, which it says is "nearly 80 percent of the U.S. population." Sprint currently has LTE in 43 markets, and work is under way in 125 more.

When Sprint purchased the majority share of Clearwire, AT&T Vice President Brad Burns expressed concern about what that meant in regard to Softbank, "one of Japan's largest wireless companies [having] control of significantly more U.S. wireless spectrum than any other company."

Burns added that he expected that would be "fully explored in the regulatory review process."

An AT&T spokesperson said AT&T wasn't commenting on Sprint's move to acquire Clearwire entirely.