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Summary:

According to new reports, Clearwire isn’t part of Softbank’s US plans. Clearwire and Softbank have a lot in common when comes to 4G technology, but that doesn’t mean there’s room for the struggling mobile broadband operator in Sprint and Softbank’s marriage.

Analysts and investors alike have been speculating that a central component to Softbank’s deal to take over Sprint was the welcoming of Clearwire back into the Sprint fold. But news reports are now throwing cold water on that theory.

Bloomberg, citing unnamed sources, reported that Sprint has no immediate plans to take over the remaining 52 percent of the 4G data carrier it doesn’t already own. The news sent Clearwire’s stock tumbling after several days of riding new highs on news of the Sprint-Softbank deal.

So why the fuss about Clearwire? The company has struggled mightily since its nationwide WiMAX rollout came to an abrupt halt in 2010 while the rest of the mobile industry threw its lot in with LTE. The company has since announced plans to deploy its own variant of LTE, called time-division or TD-LTE. Ostensibly that new network is going up right now, but Clearwire has been known to promise networks that fail to appear.

Clearwire needs both cash and customers to realize its network ambitions, and it might still be holding out hopes that a Softbank deal with Sprint is the key to both. In Softbank Clearwire has found a kindred soul. The carrier is pursuing its own TD-LTE build out in Japan, using the exact same 2.5 GHz band as Clearwire. The two are already partners in a global TD-LTE consortium – along with China Mobile and India’s Bharti – tasked with creating a handset and device ecosystem for their pet technology. A three-way marriage between Clearwire, Sprint and Softbank would only further those goals.

Sprint’s relationship with Clearwire has always been dictated by cash. But with an $8 billion cash infusion from Softbank, Sprint could buy out Clearwire outright and build the fattest LTE pipe in the country with Clearwire’s treasure trove of spectrum. That’s the theory anyway.

The thing is the so-called TD-LTE synergies of such a deal have been overstated. Buying and investing in Clearwire would definitely give TD-LTE a big boost and ensure that the technology had a place in the U.S., but that’s an awfully steep price to pay for what amounts to a vote of confidence. Softbank can build its device ecosystem just as easily by partnering with other carriers. And if the only way of keeping that global TD-LTE dream alive is to purchase struggling international operators, then Softbank may want to reconsider its technology choices.

Customers could roam between Japanese and U.S. TD-LTE networks, but a roaming agreement is hardly the basis for an acquisition. And while there might be device compatibility in TD-LTE, the remaining 2G, 3G and 4G networks and bands Softbank and Sprint-Clearwire use have absolutely nothing in common. It’s not like Sprint handsets are going to work on Softbank’s Japanese networks or vice versa – at least not until voice-over-LTE services are in full swing.

Softbank could feel there are other ways Sprint can use that cash to get the future capacity it needs, either by bidding in future 4G auctions or through other strategic acquisitions. Maybe Clearwire is ultimately part of Softbank’s U.S. ambitions, but it would be a mistake to assume that the two are natural fit just because they’re pursuing the same LTE technology.

Photo courtesy of Shutterstock user Gary Paul Lewis

  1. is there actually any information content here? Softbank gets major 2.5 GHz buying economics with Sprint. Sprint can’t buy in Clearwire without buying the whole thing and Softbank can’t do anything else till this deal is closed (that includes MetroPCS). Softbank is a major competitive threat to the biggies, while that quiet period drones one I’d watch out for spoliers to show up.

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  2. Sprint doesn’t need to buy clear wire outright because they have a large stake in the company and they are clear’s only customer.

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  3. Sprint doesn’t have enough spectrum in the US to compete with VZ and AT&T – not by a long shot. While Sprint can try to leverage their wholesale relationship with Clearwire, it’s a whole lot more efficient – and cost effective in the long run – for Sprint to own those facilities themselves.

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  4. Do you really believe SB would spend $20B without having control too the spectrum life-blood required to grow past 2014 anticipated data volumes? That would be a silly bet.

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  5. Not sure what the game is, but if your willing to get the best deal your willing to walk away(at least for the time being). Clearwire needs Sprint more than Sprint needs Clearwire now. Sprint is in a position to deal now or later, Clearwire will needs to figure if they have the same options.

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