The battle for controlling the remaining 49% stake of the 4G wireless wholesaler, Clearwire Corp. (CLWR) is becoming increasingly competitive. The battle for Clearwire started long back in Dec 2012, when Sprint Nextel Corp. (S), the 51% shareholder of Clearwire, proposed a $2.97 per share bid to acquire the remaining 49%. In Jan 2013, satellite TV operator, DISH Network Corp. (DISH) offered a counter bid of $3.30 per share to acquire the remaining 49% stake of Clearwire.
Clearwire shareholders will vote on May 31, 2013 to take a final decision about the two bids. In May 21, 2013, Sprint hiked its bid to $3.40 per share to ensure a favorable voting. However, yesterday, DISH raised its bid to a substantial $4.40 per share of Clearwire, which is 29% higher than that of the revised bid of Sprint.
DISH’s proposal has a total consideration of $6.5 billion and includes several conditions. Per the conditions, the company must get at least 25% of Clearwire’s controlling stake to nominate board members. It will pay $2.2 billion to get a 24% stake of Clearwire’s 2.66 GHz spectrum. Clearwire has to build and manage a wireless network for DISH.
DISH’s new bid contains another major issue. At present, Clearwire is reeling under a financing deal with Sprint in the form of convertible notes with a coupon rate of a mere 1% per annum. DISH has decided to pay an additional $800 million to Clearwire in order to terminate its financing deal with Sprint but Clearwire should allow DISH to convert those notes into common outstanding shares of Clearwire at a ratio of $2.50 per share.
In Apr 2013, ina major strategic move, DISH made a counter bid of $25.5 million to acquire Sprint Nextel. Softbank of Japan had earlier made a $20.1 billion bid for Sprint Nextel. DISH network is trying hard to either acquire or collaborate with an established wireless operator to build a nationwide viable wireless network.
In 2012, DISH purchased 2 slots of the 40 MHz S-band wireless spectrum fromTerreStar Networks Inc. and DBSD North America Inc. for a consideration of $2.9 billion. A recent Bloomberg report stated that DISH has made an offer of $2 billion to purchase the wireless frequencies of the bankrupt wireless wholesaler LightSquared Inc.
Just 3 days ago, DISH executed a Letter of Intent with regional wireless network operator, NTELOS Holdings Corp. (NTLS), to deploy a fixed-mobile broadband network to offer high-speed Internet service to areas served by NTELOS. DISH Network currently has a Zacks Rank #3 (Hold).
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