Sprint has made an offer to acquire wireless operator Clearwire for a price of $2.97 per share. An independent study conducted by Information Age Economics (IAE) finds that Sprint has undervalued the worth of Clearwire’s broadband spectrum and that the true value of the wireless spectrum owned by Clearwire is two to three times higher than the price offered.
According to a new filing with the Federal Communications Commission (FCC) by Crest Financial Ltd., Sprint's $2.97-a-share offer for Clearwire spectrum represents a value of $0.21 per MHz-POP. IAE's study based on comparable recent transactions and broadband market forces suggests that a more appropriate range for the value of Clearwire's spectrum would be between $0.40 and $0.70 per MHz-POP.
The IAE report, which was commissioned by Crest and attached to its new filing with the FCC, states that Sprint's valuation of Clearwire fails to take into account that Clearwire's 2.5 GHz Band is Sprint's only remaining option to keep pace with such national competitors as Verizon, AT&T and T-Mobile. Thus, making Clearwire's spectrum more valuable to Sprint than it otherwise would be.
Crest's FCC filing also contends that the proposed Sprint/Clearwire merger would harm the public interest at a time of spectrum scarcity. Crest contends that FCC approval of the proposed merger would delay spectrum deployment and exacerbate "spectrum crunch" at a time of severe scarcity.
According to Crest, the Sprint/Clearwire merger would contradict the FCC's stated mission to maximize spectrum availability for public consumption. In addition, it would place the country's largest remaining spectrum portfolio in hands least equipped, by past example, to serve the best interests of the United States and its wireless consumers.
Crest Financial, which currently owns 8.34 percent of Clearwire's outstanding Class A stock, has sued Sprint and Clearwire's board of directors for conspiring to intentionally lower the value of Clearwire's high-speed, broadband spectrum so that it could acquire Clearwire at an artificially depressed price.
Furthermore, Crest's lawsuit states that Sprint's intentions are to the financial detriment of Clearwire's minority shareholders, and contrary to the commercial interests of the public.
On Tuesday, All Things D reported that Crest has filed a suit against this merger to block the deal from going forward as well as filed a petition with FCC. Just the next day, the San Francisco Chronicle reported that struggling broadband wireless network operator Clearwire will tap $80 million in financing from Sprint, which is part of this deal. In fact, as per this report, the wireless carrier had agreed to provide Clearwire with up to 800 million in financing in the form of notes.
Findings highlight that Clearwire received buyout offers from both Sprint and Dish Network. While Sprint Nextel offered $2.2 billion for the 49 percent of Clearwire, Dish Network bid about $5.15 billion for Clearwire in January.
Edited by Jamie Epstein