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5/21/2013
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Sprint Increases Offer For Clearwire

Sprint proposed $2 billion for Clearwire last year, but had to increase the offer to $2.5 billion, or $3.40 per share.

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It's not easy being Sprint. The nation's third-largest provider of cellular services faces a daunting series of challenges in its bid to better compete with larger rivals AT&T and Verizon Wireless.

For starters, the company was forced on Tuesday to increase its bid for Clearwire by about $500 million. Sprint offered $2 billion for the company late last year, but angry investors threatening to shoot down the deal forced Sprint's hand. It called the new offer its last and best for the former WiMax provider. The total bid is now $2.5 billion, valued at $3.40 per share.

Sprint already owns 50.5% of Clearwire and is seeking to gain control of the other 49.5%. Some of the other investors include the likes of Intel and Comcast. Google sold its stake at a loss several years ago. One reason Sprint needs Clearwire is so that it can gain full control over Clearwire's 2.5-GHz spectrum holdings, which it will eventually use to supplement its burgeoning LTE network. Sprint is far behind AT&T and Verizon in deploying LTE, though it is ahead of fourth-place carrier T-Mobile USA. Sprint also needs to gain full control of Clearwire in order to ease its equity sale to Japan's SoftBank.

[ What about the devices? Read Apple Slips, Samsung Gains In Satisfaction Rankings. ]

SoftBank is looking to acquire 70% of Sprint for $20.1 billion. The deal was first announced last October. The U. S. Department of Justice has approved that deal, but it still faces questions from shareholders, the FCC and a competing bid of $25 billion from Dish Networks.

Dish made separate, unsolicited offers for both Clearwire and for Sprint earlier this year. It has effectively thrown Sprint's grand plans for a loop. Dish is asking the FCC to halt its review of the Sprint-Softbank deal until Sprint makes a decision about Dish's offer. Sprint was recently granted a waiver from Softbank to enter into negotiations with Dish as part of its due diligence in exploring that deal. Sprint is evaluating Dish's offer, but at the moment Sprint's board still recommends shareholders vote in favor of SoftBank's deal.

Meanwhile, Sprint is trying to run its business, deploy LTE and keep its customers.

The company plans to shut down its legacy iDEN network June 30, and will then begin refarming the spectrum used by that network to supplement its LTE network. For the moment, Sprint has deployed LTE only in the 1900-MHz band. The addition of the 800-MHz band, which is where the iDEN network now resides, will help bolster Sprint's 4G coverage around the country. The company announced the first devices that will be able to take advantage of that new spectrum this week during the CTIA trade show. The devices include the Novatel Wireless MiFi 500 LTE, the Netgear Zing Mobile Hotspot and the Netgear 341U USB Modem (no smartphones yet). Pricing and availability for these items will be shared in the months to come.

Sprint also announced the addition of a new, low-end Android smartphone to its network from Kyocera. The Hydro Edge is an entry-level device that is waterproof. It will hit Sprint stores this summer.

Sprint is working hard, no doubt. With any luck, its big-picture acquisition drama will resolve itself in the near future.

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