On April 8, Clearwire (CLWR) received an offer from a "strategic buyer" to buy spectrum leases...

On April 8, Clearwire (CLWR) received an offer from a "strategic buyer" to buy spectrum leases "generally located in large markets that cover approximately 5 billion MHz-POP" for a price of $1B-$1.5B, less the present value of the leases. Clearwire, which made the disclosure in a new 14A, says it will evaluate the offer. The disclosure comes on a day when Bloomberg reports Dish Network, whose $3.30/share offer for Clearwire remains outstanding, approached Deutsche Telekom about possibly merging with T-Mobile USA. CLWR +2.5% AH to $3.34.

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Comments (7)
  • bd4uandu
    , contributor
    Comments (2074) | Send Message
    And the saga continues...stay tuned till next week.
    12 Apr 2013, 07:20 PM Reply Like
  • kmi
    , contributor
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    Considering services and spectrum, I think I like the idea of Tmobile-Dish more than TMo-MetroPCS....
    12 Apr 2013, 07:54 PM Reply Like
  • jim wiesenberg
    , contributor
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    To put this in perspective, 5B MHz Pops divided by 2012 US Pops of 312.8M is about 16 MHz. If offer was just for large metros totaling 250 US Pops that is 20 MHz per market. If one uses mid-point of $1.25B for 5 B MHz Pops that is $.40 MHz/Pop.


    As Clearwire has 160 MHz in many large markets of the 198 MHz total in the 2.5 GHz band this is an amount it could sell and still have plenty for other wholesale customers, its own retail customers and/or anyone who bought rest of company.


    Most of its EBS licensees were signed 5-10 years ago or inherited from Sprint merger in 2008. Since the offer is less NPV of these leases one may need to subtract out unpaid liability. Still with several parties offering to provide $80 million of debt and $1 billion potentially available from a new party other than Dish there seem to be favorable options to a bearhug from Sprint.


    Note I am a former major market BRS licensee who sold licenses to an entity later acquired by Sprint as well as direct to Clearwire.
    13 Apr 2013, 03:08 AM Reply Like
  • skibimamex
    , contributor
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    jim,....ahem. $1.25B divided by 5B mhz-Pops is......$0.25/mhz-Pop. don't know how that affects your analysis and investment thesis.


    i wonder how the "present value" of the lease obligations will be calculated....at 15% discount rate or at 5% discout rate, and what the assumed lease renew rate is.


    The real interesting issue is that this is a "strategic" that is willing to deal with hold-up risk on the back-end of spectrum licensees so that rules out any of the big guys such as Verizon (plus in the context of this disclosure in the proxy statement, the other strategics such as AT&T and T-Mobile were already code-named as Party B and Party A in the proxy so it would have to be someone new). Furthermore it is someone that wants to get in cheap by taking some of the theoretically riskier spectrum (with built-in financing from the lease payments to deduct from value) but also a player that is interested primarily in the major markets. DirecTV maybe,...or who,...obviously someone willing to jump into the fray of a takeover controversy - which rules out most major large companies. Maybe Morgna O'Brien (the original founder of Fleet Call, nee Nextel) at Cyren Communications for his public safety play? I'm stumped.
    14 Apr 2013, 10:12 AM Reply Like
  • jim wiesenberg
    , contributor
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    To put this in perspective, 5 B MHz Pops divided by 312.8 million 2012 US Pops is about 16 MHz or about 10% of the 160 MHz Clearwire has in many markets of the 198 total MHz in the 2.5 GHz band. BRS licensees in major metros of which I was one that sold to Clearwire and prior a concern purchased by Sprint went for about $.25/MHz Pop over 5 years ago. 5 B MHz divided by mid-point offer level of $1.25 B is $.40 per MHz Pop. 16 MHz is a significant amount of spectrum for a service provider and a quantity that critical infrastructure companies like utilities would readily consider. Note SDG&E had purchased WCS spectrum at 2.3 GHz for San Diego County from NextWave a couple of years ago that it then sold to AT&T when it combined the NextWave licenses and a few others with those it already owned. WCS only has 30 MHz in total. Clearwire likely could in addition to this offer sell 10+ MHz to utilities serving metro areas before they potentially fund FirstNet or in addition. The principle here is that parts are indeed worth more than the whole when it is being hugged by a bear.
    13 Apr 2013, 03:09 AM Reply Like
  • bd4uandu
    , contributor
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    Isn't their a time limit that spectrum needs to be used?
    13 Apr 2013, 06:08 AM Reply Like
  • milehr
    , contributor
    Comments (679) | Send Message
    So, leaving aside all those technicals details, is it a good offer or not, and at how much does it value the entire CLWR spectrum holdings?
    13 Apr 2013, 08:51 AM Reply Like
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