Clearwire Completes Sprint Nextel: A Great Buy With Reduced Risks [Seeking Alpha]

Sprint Nextel (S) is the third-largest carrier in the U.S., serving 48 million customers directly. The company offers wireless and wireline voice and data transmission services to subscribers in all 50 states, Puerto Rico, and the United States Virgin Islands under the Sprint corporate brand, which includes its retail brands of Sprint, Nextel, Boost Mobile, Virgin Mobile, and Assurance Wireless. Sprint Nextel is using two separate nationwide networks: code division multiple access, CDMA, and integrated Digital Enhanced Network, iDen. iDen network will shut down in 2013.

Reducing Risks with SoftBank Deal

Japan’s SoftBank’s $20 billion takeover of Sprint Nextel is the biggest-ever overseas acquisition by a Japanese company. The deal with SoftBank will provide strong capital to enhance Sprint’s financial flexibility while dramatically reducing Sprint shareholders’ risks. Sprint can move on quickly to regain its competitive edge and to expand its network and growth.

Clearwire Acquisition

Sprint may have overpaid for Nextel, but the deal with Clearwire is making a lot of sense and resolving a lot of past issues between Sprint and Clearwire. On Dec. 7, 2012, Sprint announced the agreement to acquire 50% stake in Clearwire Corporation (CLWR) it does not currently own for $2.97 per share. This transaction results in a total Clearwire enterprise value of approximately $10 billion, including net debt and spectrum lease obligations of $5.5 billion. As stated in the report, “Clearwire’s spectrum, when combined with Sprint’s, will provide Sprint with an enhanced spectrum portfolio that will strengthen its position and increase competitiveness in the U.S. wireless industry. Sprint’s Network Vision architecture should allow for better strategic alignment and the full utilization and integration of Clearwire’s complementary 2.5 GHz spectrum assets, while achieving operational efficiencies and improved service for customers as the spectrum and network is migrated to LTE standards.” The report also noted that the transaction is also contingent on the consummation of Sprint’s previously announced transaction with SoftBank. The Clearwire and Softbank transactions are expected to close mid-2013.

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