What Clearwire Shareholders Are Mulling Over This Weekend [View article]
My guess is that Sprint loses the vote and walks away. If I am wrong, the stock goes down a little. If I am right it could go down a lot. Its likely Sprint suitors, Dish and Softbank, would be comfortable with the walk-away strategy.
If Sprint loses, Clearwire will once again be twisting in the wind. How quickly does the company go into survival mode? now or the end of June. It has about $250 MM in bond interest due in June and it will likely qualify for Sprint's $300 MM performance payment at the same time.
We suspect non-payment would result in the bond holders liquidating the company, or perhaps management would file for bankruptcy protection. In theory it cannot file without Sprint's blessing.
My thoughts are that a Clearwire bankruptcy would be bad for Sprint. In the past, Sprint management has voiced comfort with bankruptcy scenarios. It would not be the first time Sprint management did something with which investors disagreed.
Sprint's management compensation plans put it at odds with sound business relationship with Clearwire. Sprint's governance rights allow it to slowly strangle the company. Until and unless these two governance elements change, there is little likelihood that minority shareholders will realize anything near Furchgott -Roth's very reasonable analysis.
"There's no way" Sprint's (S) attempt to buy Clearwire (CLWR +0.6%) succeeds without a higher bid, says Taran Asset Management's Chris Gleason, one of many institutional Clearwire investors planning to vote against Sprint's $2.97/share offer at Tuesday's meeting. Reuters has uncovered investors holding 31% of Clearwire's public (non-Sprint-owned) shares who oppose the current deal; Sprint needs a majority of public shares to be voted in favor. Clearwire is trading 10% above Sprint's offer price, and 1% below Dish's $3.30/share offer price. (previous) [View news story]
I am betting there will be no one for minority shareholders to fight after the vote. Sprint will most likely walk away. Then where is Clearwire?
The Race For Clearwire's Assets Is Entering The Homestretch [View article]
Had economics prevailed, Sprint stock price would be likely be higher reflecting its Clearwire ownership as a positive. Sprint elected which way it levered the relationship.
Not a whine.
Just before and after the merger, Sprint assured many prospective investors that it would act constructively.
The Race For Clearwire's Assets Is Entering The Homestretch [View article]
I agree, Clearwire's days as a public company are likely numbered. Neither Sprint nor Dish's bids come close to reflecting the value of the underlying spectrum. A week or two ago, Clearwire released a proxy where its advisor's analysis pointed to a materially higher spectrum value than in prior proxies. What is bothersome to me, is that economics has not worked. Sprint has abrogated virtually every commercial agreement it has had with Clearwire. Sprint has used its power to prevent Clearwire from closing wholesale deals, selling portions of the spectrum, and to replace management. Had Sprint behaved in a more economic fashion, it could have benefitted from appreciation in Clearwire stock. Sadly, Sprint management is incented on profit margins and subscriber counts rather than shareholder value .
Sprint/Clearwire Negotiations Might Not Be A Pretty Picture [View article]
If what you say is true, then Sprint may have stretched things again. They had explained that because they (Sprint) had fallen behind in Network Vision due to supplier issues.
You may be right about more than half of its debt being mis-spent. Sprint's hurry up and wait strategy certainly had some influence. Ditto for the Sprint being a good Clearwire proxy. Backlash to Sprint's low bid and the upcoming ruling in NY make me wonder if Softbank could be jeopardized thus making Sprint a bad investment.
DPSL Glad you found my comments helpful. It is my belief that Sprint has a long term plan for both network capacity improvements and has positioned itself with Clearwire decision makers etc. Expanding the network viz proxy was clever. However, Sprint has always had a choice to create or destroy value with Clearwire. It chose to destroy value. Sprint's management was incented to do business away from Clearwire and was never incented to build value in Clearwire. I recognize that it takes two to tango, but I think Hesse had deep personal concerns about, then Clearwire CEO, Bill Morrow.
Good points and differing opinions. Do you really believe those modems cost >$500 as your $1,000 CPGA indicates? Wasn't Clearwire's G&A was much larger than that network needed
I am guessing it was 96 or 97, businesses like to test things in Denver.
I believe there is considerably more to CLWR’s tower selection than you indicate. Sprint’s engineering team would not back the plan for CLWR to use Sprint’s towers. There is also the timing of the network build. Sprint wanted the network built fast but also wanted an additional year to evaluate tower sites. Timing won.
We both agree that Clearwire is worth more dead than alive. Personally, I find it shameful that CLWR’s board did not address the liquidation question. Yes, I understand the liquidation governance issues. However, it certainly would have amplified the argument that Sprint’s stewardship damaged Clearwire.
I would not think the network redundant to all buyers – Dish for example, spectrum strapped TMO too. Most spectrum transactions have lease elements to them. The average cost of Clearwire’s leased spectrum discounts to considerably less than $0.35 per MHz pop. While backhaul alone does not justify the network, backhaul is still in short supply
Actually the first time I spoke with Sprint about this spectrum was in the 1990s when it tried to sell a proprietary wireless service in and around the band.
CPGA for the retail stores ran in the 400s to 500s. The absolute peak was $624 in Q4 2009. Churn ran in the mid 2% to low 3% while the retails stores were open. This is for near zero incremenatl cash costs against ARPU in the high $30s to low 40%. My estimate comes from discussions with Sprint engineering staf beginning in the early 2000s when Sprint was trying to market the spectrum to investors. I would like to read the FCC report, could you provide a docket number or link? In any event, I suspect your point may be moot as lower frequencies generate more interference in very small cells such for urban areas or in building networks. You make a number of obvious points and speculations regarding carrier strategies and different blocks within the 700MHz band . I would still like to know your thoughts on the relative value of spectrum. Please use the blended value of the 700 MHz auction from 2008 and the recent SpectrumCo Verizon transaction.
I would not be so sure about value destruction from the retail stores. Clearwire added many customers very quickly, it was Sprint that objected and shut it down. Now the Spectrum case you raise is one that always rattles around in my brain. Clearwire controls roughly 60% of the EBS/BRS bands. As you likely know, EBS spectrum cannot be sold by the educational licensees, Hence Clearwire has its EBS holdings, pretty well locked up with long term leases. Pre merger, Clearwire asserted it was paying as much as an NPV of $0.35 per MHz pop for leases in ring and urban markets and substantially less outside the ring. This seems more than reasonable to me. With respect to contiguity, I think the centerpoint licensing scheme mitigates that fairly substantively. What do you think? The tower ratio you quote seems quite high relative to others. My estimate is that 1.5 to 3.0 is probably better rule of thumb. Relative to ring and urban markets, where Clearwire operates, the tower ratio seems nearly moot as the ability to shrink cell size without interference is more important than covering distances across the prarie. BTW: on a relative basis how would you value Clearwire's 120 MHz average depth say relative to the 700 MHz auction or Verizon's SpectrumCo purchase? McCaw only sold his vote, he will receive any higher price that Clearwire may bring.
What Clearwire Shareholders Are Mulling Over This Weekend [View article]
What Clearwire Shareholders Are Mulling Over This Weekend [View article]
If Sprint loses, Clearwire will once again be twisting in the wind. How quickly does the company go into survival mode? now or the end of June. It has about $250 MM in bond interest due in June and it will likely qualify for Sprint's $300 MM performance payment at the same time.
We suspect non-payment would result in the bond holders liquidating the company, or perhaps management would file for bankruptcy protection. In theory it cannot file without Sprint's blessing.
My thoughts are that a Clearwire bankruptcy would be bad for Sprint. In the past, Sprint management has voiced comfort with bankruptcy scenarios. It would not be the first time Sprint management did something with which investors disagreed.
Sprint's management compensation plans put it at odds with sound business relationship with Clearwire. Sprint's governance rights allow it to slowly strangle the company. Until and unless these two governance elements change, there is little likelihood that minority shareholders will realize anything near Furchgott -Roth's very reasonable analysis.
"There's no way" Sprint's (S) attempt to buy Clearwire (CLWR +0.6%) succeeds without a higher bid, says Taran Asset Management's Chris Gleason, one of many institutional Clearwire investors planning to vote against Sprint's $2.97/share offer at Tuesday's meeting. Reuters has uncovered investors holding 31% of Clearwire's public (non-Sprint-owned) shares who oppose the current deal; Sprint needs a majority of public shares to be voted in favor. Clearwire is trading 10% above Sprint's offer price, and 1% below Dish's $3.30/share offer price. (previous) [View news story]
The Problems With Ackman's Thesis On Procter & Gamble [View article]
The Race For Clearwire's Assets Is Entering The Homestretch [View article]
Not a whine.
Just before and after the merger, Sprint assured many prospective investors that it would act constructively.
Whine.
The Race For Clearwire's Assets Is Entering The Homestretch [View article]
Top Dogs Net 9% To 56% Pacing Ten Awesome Indices [View article]
Sprint/Clearwire Negotiations Might Not Be A Pretty Picture [View article]
Sprint's Attempt To Buy Clearwire [View article]
Sprint's Attempt To Buy Clearwire [View article]
Sprint's Attempt To Buy Clearwire [View article]
Sprint's Attempt To Buy Clearwire [View article]
I am guessing it was 96 or 97, businesses like to test things in Denver.
I believe there is considerably more to CLWR’s tower selection than you indicate. Sprint’s engineering team would not back the plan for CLWR to use Sprint’s towers. There is also the timing of the network build. Sprint wanted the network built fast but also wanted an additional year to evaluate tower sites. Timing won.
We both agree that Clearwire is worth more dead than alive. Personally, I find it shameful that CLWR’s board did not address the liquidation question. Yes, I understand the liquidation governance issues. However, it certainly would have amplified the argument that Sprint’s stewardship damaged Clearwire.
I would not think the network redundant to all buyers – Dish for example, spectrum strapped TMO too. Most spectrum transactions have lease elements to them. The average cost of Clearwire’s leased spectrum discounts to considerably less than $0.35 per MHz pop. While backhaul alone does not justify the network, backhaul is still in short supply
Sprint's Attempt To Buy Clearwire [View article]
Sprint's Attempt To Buy Clearwire [View article]
My estimate comes from discussions with Sprint engineering staf beginning in the early 2000s when Sprint was trying to market the spectrum to investors.
I would like to read the FCC report, could you provide a docket number or link? In any event, I suspect your point may be moot as lower frequencies generate more interference in very small cells such for urban areas or in building networks.
You make a number of obvious points and speculations regarding carrier strategies and different blocks within the 700MHz band . I would still like to know your thoughts on the relative value of spectrum. Please use the blended value of the 700 MHz auction from 2008 and the recent SpectrumCo Verizon transaction.
Sprint's Attempt To Buy Clearwire [View article]