December 13, 2012, 4:31 PM — Sprint today formally announced its plan to shell out $2.1 billion to buy the remaining 49% of Clearwire that it doesn't already own. The move gives Sprint direct access to Clearwire's extensive spectrum portfolio, just as the carrier is set to reap some $20 billion on cash from its acquisition by SoftBank.
The carrier is offering $2.90 per share, according to its federal regulatory filing, a premium of 5.5% above Clearwire's closing stock price on Wednesday, according to Bloomberg. In its own filing, Clearwire confirmed it is "currently in discussions with Sprint regarding a potential strategic transaction."
Sprint will also offer up to $800 million interim financing to shore up Clearwire, which has been losing money.
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Sprint's move comes barely two months after it signed a deal with SoftBank, of Japan, which will buy 70% of Sprint for nearly $20 billion. The Clearwire deal may be a bargain for Sprint: Clearwire has extensive airwave holdings in the U.S. Sprint presumably will be able to use the spectrum to extend and deepen its LTE network deployment, which started this year.
Clearwire was created as a Sprint joint venture with Craig McCaw in 2008, with about $3 billion in backing from Google, Intel and several cable companies. The goal was to build a nationwide, next-generation wholesale wireless broadband network based on the WiMax standard, which at the time provided much better data rates, and did so more efficiently, than emerging 3G networks from Verizon Wireless and AT&T.
Importantly, the arrangement "allowed Sprint to sell high-speed wireless service on Clearwire's network without having to put the cost of building that infrastructure on its debt-heavy balance sheet," as The Wall Street Journal noted.
But WiMax eventually lost out to more advanced 3G technologies and especially to the next-generation LTE standard, which is being aggressively deployed by other carriers. Sprint eventually adopted LTE also.
Clearwire's stock topped out at $33.30 in 2007 but at one point in 2012 sank to just 90 cents. According to Bloomberg, Clearwire "is projected by analysts to post a record $1 billion net loss for 2012."