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Clearwire Corporation (CLWR): This Spectrum Rich Telecom Player Posts Lower Revenue

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Clearwire Corporation (NASDAQ:CLWR), the telecom provider for which both Sprint Nextel Corporation (NYSE:S) and DISH Network Corp. (NASDAQ:DISH) are fighting, posted its fourth quarter 2012 results with a higher than estimated loss and a decline in subscriber base. The Bellevue carrier, which is in the middle of its network overhaul program, is loaded with $4.27 billion debt, up 6% from last year. There is doubt regarding Clearwire’s sustainability unless it takes Sprint’s financial assistance. So the wireless operator is evaluating both Sprint’s and Dish’s offer presently, though it prefers to strike a deal with Sprint, which already owns over half the company. Let’s take a brief look at both the proposals.

Long story cut short
In December, Sprint made a $2.2 billion proposal to WiMax partners to acquire the remaining 49% stake in the company. The bid is contingent on Sprint’s pending merger with Japan based telecom giant Softbank Corp (USA) (PINK:SFTBF). Clearwire’s directors recommended the deal to its shareholders; however, some of the large shareholders showed extreme dissatisfaction with the $2.97 a share bid which awfully undervalues the most valued possession of the company. Their discontent further got aggravated when satellite provider Dish made a counterbid of $3.30 a share. Despite Dish’s higher offer Clearwire directors continue to favor Sprint’s proposal.

Clearwire is in great need of cash to continue the network upgrading program. If it doesn’t agree to Sprint’s proposal it might have to undergo a financial restructuring. However, the carrier twice rejected to draw $80 million from Sprint as it wishes to keep the Dish option open. The $80 million offered by Sprint is part of the proposal where the Kansas carrier would offer an additional financing of $800 million spread over a period of 10 months. But some analysts are speculating whether the satellite provider is actually serious about the deal since the company’s intention for the bid remains unclear. Some believe that through the Clearwire deal Dish intends to get in partnership talks with Sprint, while others say that the intention is to amass Clearwire’s spectrum. The company’s Chairman Charlie Ergen dismissed all doubts saying that the company is in search of a telecom partner to venture into the mobile wireless industry.

Nevertheless, Sprint’s intentions are pretty clear. The Clearwire acquisition would give the national carrier complete access to the most valued spectrum possession of the company. Sprint is in the middle of its Network Vision and needs airwaves to efficiently deploy the LTE technology to catch up with bigger rivals Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T). While Clearwire has the required asset of about 160 MHz of spectrum spread in the top 100 markets.

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