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How Much is Clearwire Really Worth?

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Clearwire LogoFour years ago, Sprint (NYSE:S) formed a joint venture with Clearwire (NASDAQ:CLWR) in order to build a “high-speed wireless network that would shake up the telecommunications industry and allow for a wave of new applications and devices,” according to Bloomberg. But the idea never materialized; the venture bet on the wrong wireless standard, and the project led to billions of dollars in losses.

However, Sprint is not looking to dump its majority stake in Clearwire. A regulatory filing made on Thursday showed that the wireless carrier offered to acquire all of Clearwire for $2.1 billion, or $2.90 per share.

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For Sprint, the company still holds value because of the broad stretch of airwaves it owns nationwide. As Bloomberg reported, this spectrum would give Sprint “the ability to improve its own network and handle a surge of traffic generated by smartphones and tablets.” Because of the influx of funds the company received from its deal with Japan’s Softbank (SFTBF.PK), Sprint now has the opportunity to expand its spectrum assets.

But the deal has been met with outrage from several of Clearwire’s stake holders, including Mount Kellett and Crest Financial. Mount Kellett has assigned Clearwire a price of $6.30 per share, based on a $18 billion valuation of the company’s spectrum. This figure represents a more than 100 percent increase from the stock’s closing price on Wednesday.

In a letter addressed to Clearwire’s Board of Directors, Mount Kellett, which owns a 7.3 percent stake in the company, said Sprint’s offer was an “absolute outrage.” But the fact that Clearwire has over $4.2 billion in debt and a 4G LTE buildout ahead makes Sprint’s offer more reasonable. Furthermore, as Stifel Financial analyst Christopher King said to Bloomberg, “It’s Sprint or nobody.”

Investing Insights: Will Clearwire’s Stock Continue Its Ascent?


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