Sprint Update: Clearwire Funding Agreement, Dish Approval to Build 4G Network

December 2nd, 2011 by Trefis Team
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According to a report, Clearwire (NASDAQ:CLWR) could be on the verge of reaching a funding agreement with Sprint (NYSE:S) possibly in time for its December 1 debt interest payment deadline. [1] Clearwire stock was up around 13% Wednesday in anticipation of this deal. Since Sprint has a 54% non-controlling stake in Clearwire, its stock also continue to remain more volatile compared to its competitors Verizon (NYSE:VZ) and AT&T (NYSE:T). [2]

Our $4.25 price estimate for Sprint stock is about 50% above the current market price.

See our complete analysis for Sprint stock here

Clearwire warned about skipping debt payment

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A few days back, we discussed that Clearwire’s warning that it could skip the $237 million debt payment could be aimed at pressuring Sprint into extending a network-sharing agreement with Clearwire as both depend on each other (see Sprint Update: Clearwire Plays Chicken With Sprint on Debt Payments). This is what seems to be happening as the deal would allow Sprint to use Clearwire’s network to provide services to its customers after the current pact expires at the end of 2012.

Sprint gives Dish the nod to build its own 4G network

According to another report, Sprint has now allowed Dish Network (NASDAQ:DISH) to use the spectrum, which Dish acquired from DBSD North America and Terrestar Networks, to build its own 4G LTE network. [3] Previously Sprint had objected to Dish acquiring the spectrum as it was concerned that Dish’s network would interfere with its own operations. However, now Dish seems to have addressed Sprint’s concerns of interference.

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Notes:
  1. Clearwire seen reaching Sprint funding deal, Reuters citing people following the standoff between Sprint and Clearwire, November 30th, 2011 [↩]
  2. Information on Clearwire stake available in Sprint’s SEC filings [↩]
  3. Sprint signs off on Dish’s proposed wireless venture, FierceWireless citing FCC filings as the source, November 30th, 2011 [↩]