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Cable Operators

Comcast Could Seek Exit From Clearwire

MSO Makes Moves Toward Divesting 13% Stake 10/07/2012 8:00 PM Eastern

Add Comcast to the growing list of Clearwire investors looking to divest their stake in the troubled wireless company.

In a filing with the Securities and Exchange Commission last Tuesday, Clearwire indicated that Comcast, which owns 13% of the broadband wireless company’s outstanding stock (and 6% of its vote), has converted its holdings to common shares. While Comcast has not indicated whether it would sell the stake, converting the stock is one step toward that end.

Comcast declined to comment.

The Comcast revelation was included in a prospectus filed by Clearwire for the sale of 46 million shares by partner Time Warner Cable. Investment bank Credit Suisse, which is serving as the underwriter on the deal, agreed to purchase the shares for $1.37 each, or about $63.6 million. That is about 88% less than the $550 million Time Warner Cable originally invested in Clearwire.

Comcast joined Time Warner Cable, Sprint Nextel, Google, Intel and Bright House Networks as Clearwire investors in 2008, each buying a stake in the wireless startup valued at $20 per share. The idea was that the investment would help fund construction of Clearwire’s nationwide WiMAX high-speed wireless service, which in turn would give the cable operators access to a wireless broadband product.

Although Clearwire did build out several major markets, it soon ran into cash problems and was overshadowed by another technology — LTE (Long-Term Evolution) — which has since dominated the wireless broadband space. Clearwire shares plunged and the stock, once valued as high as $24 each in 2007, closed at $1.34 on Oct. 3.

If Comcast were to sell its Clearwire holdings, it would be the third Clearwire partner to do so. In addition to Time Warner Cable, Google said in March that it would sell its 29.4 million shares for $2.26 each, or $66.7 million. It had originally invested $500 million in Clearwire.

In the meantime, cable operators have found a new partner in the wireless broadband game. As part of its agreement to sell its wireless spectrum to Verizon Wireless for $3.6 billion, Comcast, TWC and Bright House reached a co-marketing deal with the wireless giant that allows both sides to sell the other’s products.

Clearwire has said it plans to build its own LTE network, but in the SEC filing last week it said there could be some delays. Clearwire said that Phase 1 of the project, which involves overlaying up to 5,000 of Clearwire’s WiMAX sites in urban areas with LTE technology, was expected to be completed by the end of June 2013, in time to satisfy an LTE prepayment milestone under its earlier agreement with Sprint.

Clearwire said that agreement with Sprint is fl exible and allows the company to modify the pace of the rollout and still be eligible for the payments.

“As such, in order to better align our capital expenditures with the receipt of expected LTE revenues, we are currently evaluating our plans and may elect to delay a portion of our deployment schedule accordingly,” Clearwire said in the filing.

TAKEAWAY

Comcast might be following Time Warner Cable and Google in divesting its stake in wireless firm Clearwire.

September