Sprint increases stake in Clearwire beyond 50 percent
Oct 18, 2012 (Menafn - The Kansas City Star - McClatchy-Tribune Information Services via COMTEX) --Days after agreeing to a buyout from a Japanese suitor, Sprint Nextel Corp. has increased its ownership of its wireless network partner Clearwire Corp.
Sprint, in a filing with the Securities and Exchange Commission, said it bought the small stake that originally had been owned by Eagle River Holdings LLC. The purchase raised Sprint's ownership of Clearwire to 50.8 percent.
The relatively small transaction followed speculation that Sprint may pursue a buyout of Clearwire using some of the 3 billion Sprint will receive soon as part of Tokyo-based SoftBank Corp.'s agreement to buy 70 percent of Sprint.
Clearwire is seen as a critical element of the SoftBank deal because it has ample amounts of wireless spectrum Sprint needs to provide broader and deeper service using Long Term Evolution, or LTE, technology. Clearwire currently provides the network that Sprint uses for its WiMax 4G service.
Analyst Jennifer Fritzsche at Wells Fargo Securities cautioned that the deal may not be a simple move to gain control of Clearwire without going through a complete purchase. She cautioned that Sprint has taken measures in the past to avoid taking a controlling position at Clearwire. Control, she noted, would require Sprint to include Clearwire's debt and other financial results in Sprint's financial report. Doing so would weaken Sprint's financial position.
Fritzsche, in a note to clients, also noted that Sprint's deal with Eagle River includes a "make whole" agreement that would pay Eagle River more should Clearwire sell at a higher price during the next three years. Sprint paid a little less than 3 a share, she wrote.
--Mark Davis, mdavis@kcstar.com
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