SellTower Signals
Sprint to the Rescue
Only in the wireless industry can a company threaten to go bankrupt to extort more funds from its investors…and have it work like a charm!
Clearwire threatened to miss an interest payment and thus cause its debt investors to take over the company. This would have knocked Sprint, with 54% ownership, out of control over Clearwire. While the threat to miss an interest payment may have been a bluff, there is no doubt that Clearwire needed both an infusion of cash and a longer term commitment from Sprint to use its network in order to remain viable.
Given the LightSquared delay and slow pace of Sprint’s Network Vision plan to upgrade its network, Sprint was poised to be using the Clearwire network through 2014 even under the most aggressive plan to drop Clearwire. As a result of the bankruptcy leverage, Clearwire was able to secure an additional one year – to 2015 – for its wholesale arrangement with Sprint.
The resulting agreement bought more time for both companies. Sprint has more time to deploy its own LTE equipment or for LightSquared to get FCC approval to deploy. Clearwire gets a three year reprieve to decide on its future role in the wireless space plus an opportunity to assess fixed wireless options.
SellTower wishes all three companies a Happy Holiday.
