While rumors of a Sprint (News - Alert) acquisition in Clearwire have been swirling for some time now, most industry analysts had assumed that once Sprint agreed to sell 70 percent of itself to Japan's Softbank (News - Alert) Corporation, a $20 billion transaction that was announced just last week, those rumors would be put to bed.
They were wrong. Well…mostly wrong.
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In a securities filing today, Sprint announced that it will buy a controlling share in Clearwire (News - Alert), thanks to the cash it plans to pocket from the Softbank deal. The wireless carrier will purchase 31 million Class A shares and approximately 2.7 million Class B shares from Eagle River Holdings, which will leave Sprint hold 50.8 percent of Clearwire. Eagle River is the investment vehicle of Clearwire founder and wireless industry veteran Craig McCaw.
Clearwire provides mobile and fixed wireless broadband communications services to retail and wholesale customers in the U.S., Belgium and Spain. Its shares fell nearly 10 percent in premarket trading today, as the new arrangement appears to have dashed hopes that Sprint would buy the company outright.
Prior to Sprint’s purchase of the additional interest, it already held 48 percent of Clearwire, but since it wasn’t a majority stakeholder, it did not control the company’s board.
This was a risk, given that Sprint has sold service on Clearwire's network and needs access to its smaller partner's big holdings of spectrum rights, the Wall Street Journal noted yesterday.