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    Sprint’s Hesse Says Clearwire Spectrum Isn’t Enough

    By
    Michelle Maisto
    -
    February 21, 2013
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      Sprint will gain considerable spectrum assets if its bid to purchase Clearwire—which boasts of owning “more spectrum than anyone“—is approved. But feeding an industry with an insatiable and still-growing appetite for mobile data, Sprint CEO Dan Hesse says the carrier needs to acquire still more.

      “Given the increases in data usage we are seeing, we will continue to be interested in spectrum as it comes to market,” Hesse told Bloomberg in an interview, printed Feb. 20. “It could be more deals like spectrum from other companies, like we did with U.S. Cellular, or it could be FCC auctions.”

      Sprint’s rivals have been engaged in a spectrum land-grab that the deeply in-debt carrier has had to watch from the sideline—a scenario changed only recently by its deal with Japanese carrier Softbank. On Oct. 15, 2012, Sprint announced that it had sold 70 percent of its shares to Softbank for $20.1 billion. A $12.1 billion portion of the windfall was allotted to shareholders, leaving $8 billion for buying spectrum and building a Long Term Evolution (LTE) network that will enable Sprint to more effectively compete against Verizon Wireless and AT&T.

      Following the Softbank deal, the first move Sprint made was to purchase spectrum and customers from U.S. Cellular for $480 million. The deal will help out Sprint in Chicago, where it has been particularly challenged.

      Sprint next went about trying to buy up the minority portion of Clearwire that it doesn’t already own, for the higher-than-expected price of $2.2 billion, or $2.97 a share. That deal was soon afterward complicated by Dish Network, which offered Clearwire $3.30 a share but in a more complicated deal.

      Clearwire has since said that a Special Committee will continue to evaluate the Dish proposal, but it has moved ahead and filed a preliminary proxy statement in connection with Sprint’s bid.

      “Clearwire would give us a strong spectrum position for a period of time,” Hesse told Bloomberg, “but we also have a very long-term view and we would want to acquire more spectrum.”

      Bloomberg pointed out the challenge Sprint faces in catching up to its rivals. Verizon completed its controversial $3.9 billion purchase of spectrum from SpectrumCo, the venture between Comcast, Time Warner and Bright House Network; AT&T, since failing to acquire T-Mobile, has signed 50 spectrum deals in the past year, and bought up all the AWS spectrum it could manage; and even T-Mobile last summer worked a spectrum deal, purchasing and exchanging spectrum licenses in 218 markets with Verizon Wireless.

      Sprint’s options, Tolaga Research CEO Phil Marshall told Bloomberg, include making deals with U.S. Cellular or Leap Wireless, either to buy spectrum or the smaller carriers outright, working out a deal with Dish Network—which is easier suggested than done—and getting its paddle ready for the government auctions.

      In 2014, the Federal Communications Commission (FCC) will auction off all of the wireless spectrum that it can get television broadcasters to part with. Though further complicating the matter for Sprint and its peers is FCC Chairman Julius Genachowski’s desire to reserve a portion of that freed-up spectrum for a public WiFi initiative.

      Sprint’s financial burdens have been largely attributed to its unsuccessful 2004 acquisition of Nextel. Its process of shutting down that network is finally coming to a close and will be completed during the second quarter of this year—ending a longtime Sprint headache and helping its spectrum situation, to a degree.

      Hesse, during a Feb. 7 earnings call, called the shutting down of the Nextel platform an “important turning point for Sprint,” which will be able to redeploy 800Mhz spectrum to CDMA voice and LTE efforts. “LTE on 800[MHz] is now planned to commence in the fourth quarter of 2013,” he added.

      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, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.

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