The battle of takeovers among Sprint Nextel, Dish Network, Clearwire, and SoftBank has heated up as Clearwire's board recommended shareholders accept Dish's bid instead of Sprint's.
It may seem strange to see Clearwire, Sprint Nextel's longtime network partner, running into the arms of a rival bidder, but the board's decision didn't come out of nowhere. There's a complex set of factors at play among these companies, and several possible outcomes that could affect consumers differently.
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Last Thursday, Clearwire's board of directors and a special committee of independent directors recommended that shareholders of the struggling carrier accept Dish's tender offer of $4.40 per share. It was a major shift for the board, which throughout a bidding war between the two suitors had supported Sprint's plan to buy Clearwire as part of its merger with Japanese service provider SoftBank.
Sprint's ties to Clearwire go all the way back to the latter company's founding, but conflict between them is also longstanding. Sprint owns more than half of Clearwire's stock and is the main customer of the company's WiMax network, which the companies launched in 2008 as the first national 4G network in the United States. But WiMax neither lifted Sprint from its position as a struggling No. 3 mobile operator nor created a thriving business for Clearwire. While Sprint thinks Clearwire rolled the network out too slowly, Clearwire feels it's never gotten all the backing it needed from Sprint, according to Roger Entner, an analyst at Recon Analytics.
After Verizon Wireless and other rivals came out with their own 4G networks using LTE, Sprint and Clearwire each moved in that direction. Sprint now has LTE in 110 markets, so it no longer totally relies on its partner for 4G service, though it still resells access to the WiMax network. Yet Clearwire plays a key role in Sprint's future because it holds about 150MHz of radio spectrum in major metropolitan areas, some of which came from Sprint's own holdings when Clearwire was formed. Sprint wants that spectrum -- and Clearwire's own LTE network -- so it can build a more competitive LTE service.
SoftBank's offer last October to buy a majority stake in Sprint, investing billions in the company in the process, would give Sprint the resources to take Clearwire completely under its wing. Together, the companies would have SoftBank's money, Sprint's mobile business, and Clearwire's spectrum.