[May 20, 2013] Clearwire vote critical to Sprint battle plans Tweet May 21, 2013 (The Kansas City Star - McClatchy-Tribune Information Services via COMTEX) -- It's election day for the first step in Sprint Nextel Corp.'s plan for battle in the cell phone business. Shareholders of Clearwire Corp. are set to vote Tuesday on Sprint's $2.2 billion offer to buy the roughly 49 percent of Clearwire that Sprint doesn't already own. The deal, which requires approval from shareholders other than Sprint, would give the Overland Park company complete control over Clearwire's valuable airwaves that carry wireless phone traffic. A highly contentious campaign has left the outcome anything but certain. Two large shareholder groups have taken opposite sides. Even shareholder advisory services disagree about what Clearwire's owners (other than Sprint) should do. And waiting in the wings are Tokyo-based SoftBank Corp. and Colorado-based Dish Network Inc., which are competing to buy control of Sprint, particularly a Sprint that owns Clearwire outright. "It's a very interesting soap opera," said Bill Ho, a wireless industry analyst at 556 Ventures LLC in Reston, Va. The stock market already has cast doubt on Sprint's chances. Since early January, Clearwire stock has traded at more than $3 a share. It gained 6 cents Monday to close at $3.26 a share, or 9.7 percent higher than Sprint's offer. This is the market's way of saying someone likely will end up paying more for Clearwire. Sprint shares lost 3 cents Monday to close at $7.29. Analysts speculate that Sprint may raise its offer at the last minute to secure approval. It needs to get the deal done. "How Clearwire goes has big implications for Sprint," analyst Jennifer Fritzche at Wells Fargo Securities wrote in a note to clients on Monday. "We continue to believe Clearwire represents an extremely important piece of the puzzle for SoftBank." Clearwire owns a large amount of wireless spectrum. These are the federally licensed airwaves that carry wireless traffic, such as phone calls, streaming video and app downloads, that smartphone users increasingly demand. But Clearwire needs a larger network of towers, radio transmitters and antennas to put that spectrum to use serving customers. Sprint, on the other hand, is building a modern nationwide network but needs more wireless spectrum to keep delivering its promise of unlimited data usage. The unlimited data pitch is a linchpin in Sprint's battle for customers, especially those now using Verizon and AT&T. Sprint had contributed the spectrum to Clearwire in a 2008 transaction that gave Sprint its large ownership. Clearwire set out to build the network it would use. Ho said Sprint didn't have the money to build the network itself. The deal has left the two companies working, often awkwardly, toward their sometimes shared and sometimes different goals. Sprint has the money now thanks to SoftBank, which injected $3.1 billion into Sprint ahead of their deal. SoftBank infused the money as part of a $20.1 billion bid for 70 percent ownership of Sprint. The Clearwire question for Sprint largely comes down to price -- what it will need to pay to get the spectrum. Houston-based Crest Financial Ltd., the largest Clearwire shareholder other than Sprint, has argued loudly that Sprint isn't paying enough. Others have complained as well. Crest has pelted other owners with several letters and even put out a 40-page analysis of why they need to say no. It's theme is that Sprint's strong role in Clearwire made for an unfair buyout deal. Kill this deal, and a better bid will come, Crest has said. Dish had made a bid for Clearwire, before bidding for Sprint. Verizon also has shown interest in part of Clearwire's spectrum. But another big voting group -- mostly other investors in the 2008 that gave Clearwire the spectrum -- has signed on to the Sprint deal. Independent shareholder advisory services Institutional Shareholder Services and Glass, Lewis & Co., also have split on how Clearwire shareholders should vote. Tuesday's vote starts a string of events that will greatly influence how Sprint will compete in the future. Sprint shareholders are scheduled to vote on the SoftBank offer June 12. And the deal is still under review by the Federal Communications Commission. Meanwhile, Sprint owners are waiting for some final word from Sprint's board about the rival buyout offer from Dish Network. It has offered $25.5 billion for all of Sprint. Clearwire faces its own schedule of events, including a June 1 debt payment that management has said may be a problem. Fritzsche's note said her best guess is that Sprint raises its offer to get an affirmative vote. There is precedent for a late sweetener to get a deal done. T-Mobile USA, Sprint's closest rival in the cellphone market, won approval for its merger with MetroPCS early this month by improving the terms of the deal just ahead of MetroPCS's shareholders' vote. To reach Mark Davis, call 816-234-4372 or send email to [email protected]. ___ (c)2013 The Kansas City Star (Kansas City, Mo.) Visit The Kansas City Star (Kansas City, Mo.) at www.kansascity.com Distributed by MCT Information Services [ Back To TMCnet.com's Homepage ]