Cable Operators

TWC to Clear Clearwire Stake

MSO to Sell Shares at 88% Loss 9/19/2012 8:44 AM Eastern

Time Warner Cable said it will sell off its interest in Clearwire Communications at a significant loss, thus severing another tie in the ill-fated broadband consortium.

In Securities and Exchange Commission filings Sept. 14, TWC said it would sell its 46.4 million shares of Clearwire on the open market at $1.40 each, or about $65 million. That is 88% less than the $550 million the media giant originally paid for the shares in 2008.

Time Warner Cable joined Comcast, Bright House Networks, Intel and Google as Clearwire investors in 2008, each buying a stake in the wireless start-up valued at $20 per share. The idea was that the investment would help fund construction of Clearwire’s nationwide Wi-Max 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 – 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 $1.38 per share on Sept. 18. Earlier this year, Clearwire announced plans to build an LTE network.

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.

TWC is just the latest of the partners to cash out its stake – in February Google said it would sell its 29.4 million shares for $2.26 each, or a total of $66.4 million. It had originally invested $500 million in Clearwire.

Sprint holds the biggest stake in Clearwire at 705.4 million shares (54.3%), followed by Intel with 94.6 million shares (14.3%); Comcast with 88.5 million shares (13%); Eagle River Holdings with 34 million shares (5.7%); and Bright House with 8.5 million shares (1.4%).

 

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