Sprint to gain control of Clearwire
Sprint purchase of Clearwire stock will give it a 53 percent stake in the wireless network operator. Clearwire has large network but weak financials.
NEW YORK — Flush with the promise of cash from a Japanese investor, Sprint Nextel Corp. on Thursday said that it's buying out the founder of Clearwire Corp. to gain majority control of the wireless network operator.
Sprint said in a regulatory filing that it will pay wireless pioneer Craig McCaw and his holding company $100 million for a 5 percent stake in Clearwire, pushing Sprint's voting stake in the Bellevue, Washington, company to 53 percent.
Clearwire has the right to use a large chunk of the nation's airwaves, but lacks the money to renovate and expand its network. Sprint has been struggling financially too, and hasn't been in a position to invest in Clearwire. That changed with Monday's announcement that Japanese cellphone company Softbank Corp. will buy 70 percent of Sprint for $20.1 billion.
Clearwire shares fell 16 cents, or 7 percent, to $2.10 in pre-market trading Thursday. They have already nearly doubled in price on speculation that the Softbank deal means Sprint will buy Clearwire outright.
Sprint shares rose 3 cents to $5.76 in premarket dealings.
Sprint and Clearwire have a hot-and-cold relationship. Sprint rolled part of its own operations into Clearwire in 2008, gaining a stake of just over 50 percent. But Clearwire's weak financials threatened to drag Sprint down with it, and Sprint reduced its stake to less than 50 percent.
Overland Park, Kansas-based Sprint is also Clearwire's largest customer, buying wholesale access to its network and reselling it as "Sprint 4G." But Sprint is also building its own 4G network, and has shown little interest in supporting Clearwire for the long term.