TMCnet Feature
March 22, 2013

Softbank-Sprint-Clearwire Deal Seems on Track

By Gary Kim, Contributing Editor

FCC (News - Alert) Chairman Genachowski has said the agency’s review of the deals between SoftBank, Sprint and Clearwire was on a schedule “consistent with” its nonbinding 180-day transaction “shot clock,” which runs through May 29, 2013.

The chairman’s comments suggest to analysts at Stifel that he believes the FCC ultimately will approve the Softbank purchase of Sprint, as well as the Sprint acquisition of Clearwire (News - Alert).

The timing could be affected by a parallel review being conducted by the Department of Justice, Federal Bureau of Investigation and Department of Homeland Security relating to national security, law enforcement, and public safety issues raised by the deals.

If the deals were raising heavy regulatory objections, it is reasonable to suggest Chairman Genachowski would have used different language. That suggests a probable belief that the rival Dish Network bid to invest in Clearwire will fail.

The FCC could still impose some merger conditions, though. Spectrum (News - Alert) aggregation is a particular focus of some parties that say all of Clearwire’s 2.5 GHz band is both “suitable” and “available” for mobile broadband, and should thus be counted toward the agency’s “spectrum screen” that triggers heightened scrutiny of any deal where spectrum is involved.

Verizon (News - Alert) argues that Clearwire’s 2.5 GHz band holdings average 160 MHz in the top 100 markets, exceeding the current screen of up to 151 MHz, even more so when combined with Sprint’s spectrum.

That suggests some spectrum divestitures could be required as part of a deal approval.

Stifel analysts also believe there could be some conditions imposed by DOJ, FBI or DHS, in particular related to security concerns around Chinese equipment makers Huawei and ZTE (News - Alert).

Such conditions could include equipment restrictions or reporting and review processes.

In October 2012, Sprint sold a 70 percent stake in the company to Softbank. The $20 billion agreement is complicated by a separate bid by Sprint to buy the balance of Clearwire it does not already  own, a move believed to be crucial for Softbank’s future plans.

The Sprint purchase of the remainder of Clearwire was complicated by a rival bid from DISH Network. But many observers have considered Dish Network’s bid unlikely to upset the sale to Sprint.

Edited by Brooke Neuman
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