Sprint Nextel Corporation(NYSE:S), backed with
funds from Japanese cellphone company, Softbank, is negotiating a deal to pay a
sum of $100 million to gain majority control over the wireless network
operator, Clearwire Corporation(NASDAQ:CLWR). If pioneer Craig McCaw accepts
the offer, then Sprint’s voting stake in the company will move to 50.45% from
48.15%. Shares of Sprint went up 5 cents to $5.78 a share.
Although Clearwire controls a big sector of the
nation's airwaves, it is lacking in funds required to revamp and expand its
reach. Sprint was facing financial constraints as well, till Softbank decided
to purchase 70% of Sprint for $20.1 billion. Shares of Clearwire went down 10.20
cents or 10.20% to $2.03 in Thursday trading.
Analyst Christopher King stated that Clearwire
shareholders would have been happier if Sprint bought the entire company, but
even if Sprint controls a majority, it is certainly brightens up the future of
the cash-strapped company. Even if cable companies Comcast and Bright House
Networks and chipmaker Intel, which are Clearwire's other major investors,
purchase some of McCaw's shares, Sprint will still gain control at 50.02%.
A portion of Sprint’s operations were maneuvered
into Clearwire in 2008, which gave the former a stake slightly over 50%, but
the former’s financial status forced Sprint to cut down its stake to below 50
%. Sprint is also a wholesale purchaser of Clearwire’s wireless network, which
they resell as Sprint 4G. However, Sprint is developing its own 4G network so
that future of Clearwire’s network is uncertain.
Apparently, Softbank owns a 4G network back in Japan , with
technologies and frequencies similar to what Clearwire’s planned new network
uses, which is a subtle indication that the technology will be jointly
harnessed.
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