Clearwire Gets $220M if Merger Fails

Posted by Sam Churchill on

Sprint could owe Clearwire $220 million in fees if its $2.2 billion acquisition falls through, reports the Kansas City Biz Journal. In Sprint’s 8-K filing, (pdf), the 3rd largest wireless carrier has also stated that Clearwire will be subject to a “no-shop” restriction on its ability to solicit offers or proposals concerning an acquisition with third parties about a possible acquisition proposal.

If the FCC approves Sprint’s acquisition of Clearwire, Sprint will be the largest spectrum holder in the United States, with an average of just over 200 MHz of spectrum across the country. It will own roughly as much spectrum as AT&T and Verizon combined, while having a quarter of the subscribers.

According to FierceWireless, Sprint will then own more than a third of the 547 MHz of spectrum useable for wireless broadband, but with with less than one sixth of U.S. customers. That gives Sprint (on average 200 MHz and 56 million subscribers) the chance to use roughly 3.57 MHz of spectrum to support each of their subs. Compare that to a Verizon (on average 105 MHz and roughly 100 million subscribers) which has only 1.05 MHz of spectrum to support each customer’s uses.

Meanwhile, the FCC has told Dish Network that it must cover at least 40 percent of the population with a wireless network in the next four years, or face penalties. Further, the FCC said Dish must cover at least 70 percent of that population within seven years.

Last week the FCC’s five commissioners voted unanimously to approve Dish’s plans to deploy a terrestrial network with its 40 MHz of MSS spectrum, which the FCC renamed AWS-4. Dish has said it wants to partner with a mobile operator who already has infrastructure and handles voice and billing.

Speculation is that Dish has two main candidates; AT&T and Sprint.

The FCC also solidified plans to auction off 10 megahertz of spectrum in the 1.9 GHz band, also known as the H-Band. License winners would be required to meet similar build out requirements of 40% population coverage within four years and 70% coverage within 10 years.

License winners will be allowed to lease access to that spectrum, but they will also have to pay Sprint Nextel a “pro rata” share of expenses previously paid by the carrier in connection with clearing previous tenants in that band, associated with Sprint Nextel’s 800 MHz re-banding efforts, under an FCC ruling.

Verizon is clearly the LTE leader at the moment, with AT&T coming on strong, both using the 700 MHz band. Verizon paid SpectrumCo $3.9 Billion for AWS spectrum to enable LTE expansion, but AT&T is currently stuck, with only a small amount of AWS (1.7/2.1 GHz) and some 2.3GHz spectrum that will cover parts of the country (in 3-4 years).

AT&T’s WCS spectrum cost them $650 million and will amount to 10-20 megahertz of WCS A and B Block spectrum in 473 CMAs, covering close to 70 percent of the population of the contiguous 48 states.

Another 5-10 megahertz of WCS C and D Block spectrum in 344 CMAs, covers 54 percent of the population of the contiguous 48 states — but they can’t use it. They had to buy it to act as a guard band for satellite radio. Another 10-30 megahertz of AWS-1 spectrum in 29 CMAs, covers 2 percent of the population of the contiguous 48 states. India’s 2.3 GHz spectrum for TD-LTE goes from 2.305 GHz to 2.348 GHz, which is not in direct harmony with AT&T’s spectrum. China Mobile Hong Kong uses 2330MHz-2360MHz for TD-LTE, while mainland China uses the entire 2.6 GHz (Band 41) for TD-LTE as does Softbank in Japan.

If AT&T gets Dish, another un-harmonized spectrum chunk, Google may go with Sprint for the international 2.6 GHz band. And visa versa. Everything else will fall into place after any Google announcement. Apple will surely announce a 2.6 GHz iPhone for the Chinese market in 2013, since it is the 2nd most popular LTE band world-wide (after 1.8 GHz). That band would also be popular for any Apple TV. AT&T may need 2.6 GHz because a 3-4 year delay for 2.1/2.3 GHz is too long.

If Dish and Sprint do a deal, Sprint may be required to sell 2.6 to AT&T to satisfy the FTC. Softbank may not be happy about it, but they could make a buck or two. A sales price might be similar to the UK auction results for 2.6 – perhaps north of $.25 Mhz/Pop.

The Netherlands raised EUR3.8 billion (USD5 billion) in their spectrum auction, significantly more than the EUR480 million estimate. Most all of it was in the lower frequencies. The British auction, for 800 MHz and 2.6 GHz, could raise £2 billion to £4 billion, or $3.2 billion to $6.5 billion.

Royal KPN, in which Carlos Slim’s América Móvil holds a 28% stake, acquired 2×10MHz in the 800MHz band, 2×10MHz in the 900MHz band, 2×20MHz in the 1800MHz band, 2×5MHz in the 2.1GHz band and 30MHz in the 2.6GHz TDD band. With KPN’s 30 Mhz of unpaired and 20 MHz of paired (50 MHz total) in the 2.6 GHz band, Carlos Slim is apparently taking the band seriously. Maybe Ergin ought to sell his 2.1 to ATT, and move Blockbuster to 2.6 — where the action is. A Dish satellite TV receiver on every tower!

Posted by Sam Churchill on Tuesday, December 18th, 2012 at 12:10 pm .

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