Sprint may buy additional chunk of Clearwire; distances itself from Huawei chatter

22 Oct 2012

Following last week’s announcement that Sprint Nextel will increase its ownership in Clearwire from 48.0% to 50.8% via the purchase of around USD100 million worth of stock from Eagle River Holdings, the investment firm owned by wireless industry pioneer Craig McCaw, Sprint CEO Dan Hesse has suggested that the company may seek to buy out other strategic investors, if the price is right. Hesse told Bloomberg: ‘Any time there is an opportunity at the right price to take out a strategic investor, we will. We just never made an offer to buy all of Clearwire. That is just not on the table. We do not need to do anything, we have a commercial arrangement with Clearwire, we have a contract and they provide us with WiMAX 4G services and they are beginning to build out 4G Long Term Evolution [LTE] services’. Hesse made the comments during a joint interview with Masayoshi Son, the president of Softbank Corp, whose firm recently agreed to buy 70% of Sprint for around USD20 billion. Clearwire investors currently include equipment vendor Intel Corp and US cablecos Comcast and Time Warner Cable (TWC). Last month TWC revealed that it was planning to sell its entire 7.8% stake in the company. Previously, in February this year Zurich-based financial services company Credit Suisse Group acquired Google Inc’s minority stake in Clearwire; the transaction saw the search engine giant offload 29.4 million shares for USD2.26 apiece, or USD66.5 million. That sale price represented a steep discount to the USD500 million originally paid by Google for the shares in 2008, but a marked improvement on the USD1.60 per share that Google initially sought for its shareholding.

In a separate development, Bloomberg reports that Sprint CEO Dan Hesse intends to avoid using network equipment made by China’s Huawei in a bid to stay in line with US government concerns relating to possible security threats posed by the Chinese company. As the aforementioned Sprint/Softbank deal moves forward, some industry insiders have suggested that Softbank’s use of Huawei as an equipment supplier may draw scrutiny. Hesse commented: ‘Sprint is a big supplier to the US government and that aside, I would not put in any equipment that would raise any security concerns. Sprint has crossed this bridge before and chose not to use equipment in our network that raised any security concerns, so we would always, regardless of the approval process before or after, be very sensitive to that issue’. Softbank’s Masayoshi Son also sought to play down the issue, noting that Huawei is a fairly small supplier to Softbank. He said: ‘I am aware in the US, the government is looking at it, and we understand national security. So if the US government decides “don’t do it”’, we would comply. Only one of our group subsidiary companies is using Huawei and ZTE. It is never our main investment’. According to data compiled by the news agency, around 10% of Softbank’s capital expenditures go to Huawei and ZTE for the purchase of equipment. For its part, William Plummer, Huawei’s vice president of external affairs and chief spokesperson in Washington, commented: ‘It’s a bit puzzling, given that Huawei has no involvement in the transaction, so it is not relevant’.

United States, Clearwire, Huawei Technologies, SoftBank Group Corp, Sprint Corporation (now part of T-Mobile US)