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Sprint and Clearwire aren’t sharing details, but according to sources they’re in talks about the possibility of Sprint, which currently owns a majority share of the spectrum-rich 4G provider, to buy out the remainder of the company.
“A deal may be announced by the end of the year, though talks could still fall through, according to [sources],” Bloomberg reported Dec. 11.
Sprint announced plans Oct. 15 to sell a 70 percent share of the carrier to Softbank, Japan’s third-largest wireless carrier, for $20.1 billion. While $12.1 billion will go to Sprint shareholders, the remainder has been allocated to boosting Sprint’s bottom line and advancing its rollout of a 4G Long Term Evolution (LTE) network, which means it has funding for just such a purchase.
“Anytime there’s an opportunity at the right price to take out a strategic investor, we will,” Sprint CEO Dan Hesse said in an interview following the Softbank deal, according to Bloomberg.
Also giving the rumor legs, Sprint announced Nov. 29—its deadline for filing a proxy statement and prospectus for its deal with Softbank—that it was extending the deadline to Dec. 21. The extension could give Sprint what extra time it needs to work out the deal with Clearwire.
Days ahead of the Softbank announcement, Sprint initiated a move to buy shares of Clearwire from Craig McCaw, a co-founder who retired from his role as chairman in 2010. McCaw’s shares gave Sprint a majority portion of the company—a scenario that, with Softbank now controlling a majority portion of Sprint, has some industry players concerned.
“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,” AT&T Vice President Brad Burns said in an Oct. 18 statement. “We expect that fact and others will be fully explored in the regulatory review process.”
Sprint helped form Clearwire in 2008 with a group of investors that included Google, Intel, Comcast and Time Warner. Sprint was also the first major carrier to offer a 4G network through Clearwire’s rollout of WiMax, an early 4G technology. Hesse has acknowledged he expected to eventually lose out to LTE, but chose to move ahead anyway as a means of being first to market.
Clearwire, like Sprint, has promised to roll out LTE, but while Sprint is in the early stages, Clearwire has yet to make progress. However, it’s not for lack of spectrum—ClearWire’s considerable spectrum holdings are a sure lure for Sprint.
“With 160MHz of wireless spectrum on average in some of the largest markets in the United States, Clearwire will be able to deliver more capacity to high-density, high-demand markets than other wireless networks,” Clearwire says in a statement on its Website. “The Clearwire LTE network will target densely populated, urban areas where demand for mobile broadband is high. Our 4G LTE network will use Time Division Duplex (TDD) LTE technology and reuse our existing all-IP network architecture, which will yield savings on capital expenses.”
Clearwire also has holdings on the 2.5GHz spectrum band, and said the TDD-LTE technology it has chosen “could serve billions of devices.”
Follow Michelle Maisto on Twitter.