Sprint Buys A Majority Stake In Clearwire

Posted Oct 18, 2012

Sprint Nextel has bought a majority interest in Clearwire Corporation.  Sprint bought stake from the company’s founder after a dispute with other investors.  Sprint reached a deal with Eagle River Holdings.  Now Sprint has a 50.8% stake in Clearwire according to a securities filing.  Eagle River is the investment vehicle for Clearwire founder Craig McCaw.

This is the second major move that Sprint made in a week.  Sprint recently announced a deal with Softbank in Japan.  Sprint agreed to sell 70% of the company to Softbank as part of a $20 billion transaction.  Clearwire’s spectrum is being used to plan high-speed upgrades for Sprint’s network.  Clearwire’s planned technology platform is similar to what Softbank uses.

It is uncertain whether Sprint will have to consolidate Clearwire’s results and debt into their own balance sheet.  If Sprint had to consolidate those financials, then it would make the company’s balance sheet look bad.

Sprint paid the equivalent of $2 per Class A share for Eagle River’s 30.9 million shares.  Sprint also bought fractional interests in Class B shares.  Sprint will be paying $100 million for the acquisition through their working capital.  Eagle River sent a notice on October 13 that they wanted to sell, but Clearwire shareholders Intel and Comcast had objected to the sale offer.