April 15, 2013, 2:47 PM — Verizon Wireless reportedly has offered US$1 billion to $1.5 billion for some of Clearwire's spectrum leases, possibly complicating Sprint Nextel's attempt to buy out the company in conjunction with its acquisition by Softbank.
Clearwire is struggling financially but owns broad swaths of spectrum, the lifeblood of wireless networks. The April 8 bid from "Party J," which Clearwire disclosed in a Securities and Exchange Commission filing on Friday, is the latest in a series of offers for its spectrum licenses. Unnamed people familiar with the matter identified "Party J" as Verizon Wireless, according to a report in The Wall Street Journal.
Clearwire is a key part of a complicated set of possible transactions that could make a much stronger competitor out of Sprint, the country's third-largest mobile operator. Sprint already owns roughly half of Clearwire and is bidding about $2.2 billion to buy the rest of its stock. That deal depends on Softbank's planned $20.1 billion offer for 70 percent of Sprint, which is still undergoing regulatory review.
Clearwire holds 150MHz of spectrum or more in most major markets of the U.S. Verizon would buy only a portion of that spectrum. "Party J offered to acquire Clearwire spectrum leases generally located in large markets," Clearwire said in the Friday filing, a proxy statement to shareholders on the Sprint buyout bid. The proposed gross price of $1 billion to $1.5 billion would be reduced by what Clearwire pays for the leases, which could be substantial, according to Clearwire's filing. The company said it would discuss the offer with "Party J" and Sprint.
Verizon Wireless, the second-largest mobile operator in the U.S. by subscribers, already holds large amounts of spectrum but has continued to accumulate it. Last year it paid a consortium of cable operators $3.6 billion for their wireless spectrum. Clearwire's frequencies, which are in a higher band than most cellular systems and are well-suited for relatively short-range services, might allow Verizon to add more data capacity to its network in urban areas. Acquiring the leases would also take them away from a major rival if Clearwire is to be acquired.
If a Clearwire buyout by Sprint or Dish is imminent, Verizon is about to lose the chance to take over those frequencies. But even under the current ownership of Clearwire, Sprint's heavy ownership position could complicate any such bid.