Verizon Muddies the Sprint Deal Even More

Cell Tower detailThe announcement this morning of a $25.5 billion offer from Dish Network Corp. (NASDAQ: DISH) for Sprint Nextel Corp. (NYSE: S) has pushed Sprint stock up by double digits. Part of Sprint's value, both to Softbank - the Japan-based firm that made the original bid for Sprint - and to Dish comes from Sprint's ownership stake in Clearwire Corp. (NASDAQ: CLWR), which Sprint has offered to raise to 100%.

A report in The Wall Street Journal this morning cites unnamed sources as saying that Verizon Communications Inc. (NYSE: VZ) has offered $1.5 billion for a piece of Clearwire's spectrum. The WSJ's report notes that the offer seeks the right to use the spectrum in big U.S. markets.

Because Sprint already owns a majority stake in Clearwire, it can reject the offer from Verizon, but at the risk of raising the hackles of other Clearwire stakeholders who might then head for a lawyer's office. On the plus side for both Sprint and Clearwire is that, if they allow Verizon to have access to the spectrum, the money would help keep Clearwire from going to bankruptcy court.

Clearwire's spectrum assets are arguably the company's most valuable. There is a relatively limited supply available, and Verizon has been the most aggressive buyer of spectrum.

Now that Verizon and AT&T Inc. (NYSE: T) virtually control the U.S. wireless market, the U.S. Department of Justice is getting more active in reviewing spectrum sales and mergers. The WSJ notes that the DoJ last Friday filed a letter with the Federal Communications Commission warning against allowing the large carriers to control future auctions of highly sought-after spectrum. Last year the DoJ scuttled a proposed $40 billion AT&T merger with T-Mobile.

Shares of Sprint are trading up about 13.3% at $7.05, after pushing up the top end of a 52-week range now at $2.30 to $7.33.


Filed under: 24/7 Wall St. Wire, Mergers and Buy Outs, Technology Companies, Telecom & Wireless Tagged: CLWR, DISH, S, T, VZ

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