Sprint is making some moves.
At the beginning of the week, Sprint and SoftBank (a Japanese carrier) confirmed a $20.1 billion acquisition. The deal came with some stiff stipulations, but basically, SoftBank bought a controlling share of the company’s stock. They paid $8 billion in newly-issued shares, and $12.1 billion in existing shares. They own a 70 percent stake overall.
On the heals of this massive acquisition, Sprint made a purchase of their own. They bought a 50.8% controling stake in wireless provider Clearwire. The deal could be good for Clearwire, but investors aren’t impressed.
It’s probably going to happen eventually
The likely final outcome is that SoftBank will force Sprint to purchase Clearwire outright. The Japanese company wants full control over Clearwire’s “vast reserves of spectrum.”
FBR Capital Markets, in a note to clients on Thursday, said the deal eliminated a major risk for Sprint, which can now control Clearwire’s valuable spectrum assets and have unfettered access to them.
“This precludes anyone else from coming in and gives Softbank clarity on Sprint’s assets,” said Rostan, adding that once Softbank and Sprint close their deal “you will likely see them buy out Clearwire.”
This of course was the expectation of investors since the announcement of the SoftBank deal. The fact that it didn’t go through as they expected has caused quite a bit of reservation, and the stock price of Clearwire is down 8% on the news.
“Investors were hoping for a takeover premium and all they got was this mini-takeover,” said Scott Rostan.
At the very least it can be said that Sprint and the US mobile carrier market in general isn’t sitting still.