Sprint looking for bigger stake in Clearwire

Down to the wire

A Friday Bloomberg report citing three unnamed sources is stating that Sprint is in talks with cable companies Comcast (CMSCA), Cox Communications and Cablevision Systems (CVC) regarding plans to purchase the shares in Clearwire that it does not currently own.

The cable companies would invest with Sprint, and help Clearwire complete the development and build out of its high speed network. Clearwire reportedly needs $600 million to finish the network, which would help Sprint position itself against larger rivals Verizon (VZ) and AT&T (T). A deal with Sprint would help the cable companies involved compete against the large telephone service providers who have delved into the television business.

The size and timing of the deal have yet to be determined, and it could take place in a variety of forms, including a Clearwire buyout or investment in the company through Sprint. Some were surprised at news of the rumored deal, as it appeared Sprint was seeking other network providers after signing a 15-year network development with LightSquared last month. However, one Wall Street analyst notes that Sprint may be deepening its relationship with Clearwire as a hedge should LightSquared’s network fail.

Sprint Nextel (S : NYSE : US$3.42), Net Change: -0.07, % Change: -2.01%, Volume: 49,334,191
Clearwire (CLWR : NASDAQ : US$3.01), Net Change: 0.70, % Change: 30.30%, Volume: 27,175,424

About the Author

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

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