Finance

FCC Votes to Approve Sprint Transactions with Softbank, Clearwire

Commission Okays Japanese Company's Investment in Sprint, Telco's Purchase of Remaining Stake in WiMax's Pioneer 7/05/2013 7:20 PM Eastern

The Federal Communications Commission has given its unanimous approval for Japan’s SoftBank Corp. to take control of Sprint Nextel, as well Sprint’s plan to purchase the part of Clearwire it doesn’t already own.

Acting chairwoman Mignon Clyburn and commissioners Jennifer Rosenworcel and Ajit Pai all voted for the transactions.

The July5 decision completes the Federal government's reviews of SoftBank’s $21.6 billion investment in Sprint and the latter's acquisition of the 49% of WiMax pioneer Clearwire it didn’t control. Sprint’s shareholders approved the SoftBank transaction with Sprint on June 25, while  Clearwire’s shareholders are scheduled to vote on the Sprint transaction, which has been recommended, on July 8.

"The increased investment in Sprint's and Clearwire's networks is likely to accelerate deployment of mobile broadband services and enhance competition in the mobile marketplace, promoting customer choice, innovation and lower prices," Clyburn said in a statement.

Sprint needs the SoftBank investment to help fund a network upgrade to better compete with AT&T Inc and Verizon Communications Inc. The money would also help pay for the Clearwire buyout.

Dish was a player in both transactions. The satellite giant dropped its $25.5 billion bid for a 100% interest in the wireless carrier on June 18, after a revised bid from SoftBank.

As for Clearwire, the No. 2 DBS provider offered to pay Clearwire shareholders $3.30 per share for their stock in January, a move that seemed to trump Sprint Nextel’s $2.97 per share offer. Sprint upped the ante to $3.40 per share in May, followed later that month by Dish’s $4.40 per share tender offer. On June 20, Sprint raised the bar again to $5 per share. On that date, a special committee of Clearwire’s board of directors recommended shareholders accept the Sprint offer.

The question now remains what Dish and chairman Charlie Ergen will do with its wireless spectrum. Reports have speculated that Dish could sell its spectrum, focus its attention on pursuing a merger with the nation’s largest satellite TV service provider DirecTV, or attempt to acquire another wireless company like T-Mobile.

Commenting on the FCC approbation, Sprint CEO Dan Hesse issued this statement: “We would like to thank acting chairwoman Clyburn, commissioners Rosenworcel and Pai, as well as the staff of the FCC for their thorough review of these transactions. Just two years ago, the wireless industry was at the doorstep of duopoly, but with these transformative transactions, we are one step closer to a stronger Sprint which will better serve consumers, challenge the market share leaders and drive innovation in the American economy.”

Noted SoftBank chairman and CEO Masayoshi Son: “The FCC’s thoughtful review and approval of these transactions represents an important step toward creating a more competitive U.S. wireless marketplace. SoftBank’s investment in Sprint will bring innovation and increased customer focus, which will enable us to begin creating a true competitor in a market dominated by two companies. We look forward to leveraging the significant talent and resources of the New Sprint to bring innovation and better service to U.S. consumers.” 

Clearwire CEO and president Erick Prusch was also pleased with the FCC vote. “We appreciate the forward thinking, consumer-focused stance the FCC has taken by approving the proposed transaction. As the company that built America’s first nationwide 4G network, Clearwire looks forward to joining Sprint and deploying an even faster and richer 4G experience for consumers across the country,” said Prusch. “This is the right transaction at the right time to best deploy Clearwire’s spectrum to create a broadband network that will bring additional services and alternatives to wireless consumers.”

September