Sprint Said Not to Plan Clearwire Takeover After Softbank Deal
Sprint Nextel Corp. (S), which agreed to sell a 70 percent stake to Softbank Corp. (9984) for $20.1 billion, has no immediate plans to take over Clearwire Corp. (CLWR), said people with direct knowledge of the situation.
Context & Ripple Effects
Five days after Reuters reported Japan's Softbank in talks for a multibillion-dollar Sprint stake, the two sides have settled on structure: Sprint sells Softbank roughly 70 percent for $20.1 billion, and the first question off everyone's list — whether the new money would also swallow wholesale partner Clearwire — gets an explicit 'not now' from people with direct knowledge of Sprint's thinking. That matters because Clearwire's position has been deteriorating for a year: GigaOM reported in November 2011 that Clearwire's deepening financial problems threatened Sprint's own 4G buildout, making the wholesaler the unresolved piece of any Sprint recapitalization.
The two companies have been here before — they scrapped their joint WiMax agreement back in 2007 (the abandoned WiMax pact) — so 'no immediate plans' reads less like strategy than sequencing: fix the balance sheet first, decide Clearwire's fate second.
First-order effects
- Clearwire stays a standalone company for now, still carrying the funding gap that GigaOM flagged in 2011, while Sprint's $20.1 billion Softbank transaction proceeds without absorbing Clearwire's debt or wholesale obligations.
Second-order effects
- With Sprint declining to buy, Clearwire is pushed back onto outside capital markets or renegotiated wholesale terms with Sprint — the same leverage problem that made it a liability to Sprint's 4G plans in the first place.
Third-order effects
- If the pattern holds, US wireless consolidation increasingly runs through foreign balance sheets: a Japanese acquirer sets the pace at Sprint, and wholly owned spectrum assets like Clearwire become cleanup acquisitions once the anchor deal closes.
The trend: US wireless is consolidating under cross-border capital, with cash-strapped wholesale spectrum partners like Clearwire left waiting on the acquirer's sequencing rather than the market.