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
technologies and frequencies similar to what Clearwire’s planned new network
uses, which is a subtle indication that the technology will be jointly