July 8, 2013

Clearwire shareholders approve Sprint merger

Vote clears last hurdle for plans Sprint hatched in combination with SoftBank Corp. last October to take on rivals Verizon, AT&T and T-Mobile.

Shareholders of Clearwire Corp. approved its $3.9 billion merger with Sprint Nextel Corp. in a vote Monday.

Clearwire said 82 percent of the shares unaffiliated with Sprint voted for the deal.

Their consent clears the path for Sprint, Clearwire and SoftBank Corp. to complete plans announced last October to combine and take on their rivals Verizon, AT&T and T-Mobile in the U.S. wireless market.

The companies plan to close the Clearwire transaction Tuesday, and SoftBank’s purchase of 78 percent of Sprint on Wednesday.

“It comes down to money and deployment,” said Bill Ho, an analyst at 566 Ventures LLC.

Sprint made its bid for the nearly half of Clearwire it doesn’t already own. The merger gives Sprint, soon to be controlled by SoftBank in Tokyo, control over Clearwire’s valuable wireless spectrum.

Spectrum is the licensed airwaves that carry video, apps, photos and other data to mobile devices such as smartphones and tablets. Wireless carriers are scrambling for more spectrum as consumers use more and more data on mobile devices.

Sprint and SoftBank had considered Clearwire’s spectrum a key part of their plans. Acquiring Clearwire allows Sprint a free hand in how to use Clearwire’s spectrum alongside Sprint’s spectrum holdings.

Merging Clearwire’s operations into Sprint raises the possibilities of some job cuts and network changes, according to analysts. Clearwire had been cutting its costs, for example in marketing, out of financial necessity, but the potential for overlap with Sprint remains.

“It depends on how thin Clearwire ran its organization,” Ho said.

Clearwire also operates a wireless network with a limited footprint. Sprint will need to decide how to integrate Clearwire’s towers into its own network, which is undergoing an upgrade, said Berge Ayvazian, an industry consultant at HeavyReading.com.

Sprint and Clearwire also are both adding faster service to their networks using LTE, or Long Term Evolution, technology. But they are using different flavors, each better suited to its different spectrum.

“This is an opportunity for Sprint to re-evaluate the whole build-out of LTE on Clearwire’s spectrum,” Ayvazian said.

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