John Paczkowski

Recent Posts by John Paczkowski

Clearwire Spikes on Prospects After Sprint-SoftBank Deal

SoftBank’s massive investment in Sprint doesn’t include any provisions related to Clearwire, the wireless broadband provider that is 49 percent owned by the carrier. But Wall Street is behaving as though it did.

Clearwire shares spiked more than 20 percent Monday after SoftBank said it will take a 70 percent stake in Sprint Nextel for $20.1 billion. That’s a new 52-week high. And at $2.68, Clearwire’s stock is trading at more than double what it was a week ago.

Clearly, there’s a lot of optimistic speculation about what SoftBank’s investment in Clearwire’s largest shareholder means. The wireless broadband provider desperately needs cash to modernize its network. And Sprint hasn’t exactly been in the best financial position to help it. Now, with SoftBank in the picture, it could be.

And the implications for both companies are significant. Clearwire could suddenly find itself with the financial resources it needs to escape the liquidity problems that always seem to be hovering above it and to build out its network. And if that should happen, Sprint would be in a much stronger position to compete with AT&T and Verizon, according to BTIG Research analyst Walter Piecyk.

“Clearwire [would provide] ample capacity for Sprint to continue offering unlimited data offerings while its peers are metering data with buckets,” Piecyk observed in a recent note to clients. “What could truly differentiate Sprint would be the deployment of TDD-LTE networks on Clearwire’s spectrum in the top 35 markets, which are home to 125 million Americans. The speeds from a well-built TDD-LTE network, with that much spectrum, could materially outpace what Verizon and AT&T are offering in the market today or even three years from now.”

Indeed, it probably could. Question is, will it? And will SoftBank make any moves on Clearwire? That’s not yet evident, but SoftBank CEO Masayoshi Son certainly hasn’t dismissed the idea outright. As he said during an early morning conference call to announce the deal, “I cannot rule out any possibilities. Anything can happen.”

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