Funding news added some new twists and turns to the future of both Clearwire and Dish Networks.
At Clearwire, minority shareholder Crest Financial said it was proposing to provide the carrier with up to $240 million in financing through convertible debt that would allow Clearwire’s board to stop dipping into financing being provided by Sprint Nextel, which many have viewed as bringing Clearwire closer to accepting Sprint Nextel’s current $2.2 billion buyout attempt. That acquisition attempt is being held up by a counter-bid posted by Dish Networks, which Clearwire has stated it was still reviewing. However, while it’s reviewing its options, Clearwire has dipped into a pair of funding options provided by Sprint Nextel as part of its acquisition attempt.
“The arrangement, described in a letter to Clearwire’s board, is superior to the financing provided by Sprint Nextel Corporation and designed to free Clearwire to explore alternatives to Sprint’s inadequate merger offer,” Crest Financial noted in a statement. “The Crest proposal is similarly structured as the Sprint financing with Clearwire but is more favorable to Clearwire and its minority shareholders.”
Crest Financial noted that the $240 million in financing would provide Clearwire with enough capital to build out 2,000 cell sites with LTE capabilities and to pay interest expenses in 2013. Crest added that with the addition of the $160 million Clearwire has already received from Sprint Nextel, the carrier could install LTE equipment on up to 2,133 cell sites.
Clearwire noted last year that it planned to launch its TDD-LTE network across 31 cities during the first half of 2013, including New York City, San Francisco, Los Angeles, Chicago and Seattle. The carrier noted that the deployment will target what it termed “high demand ‘hot zones’” in urban centers that can take advantage Clearwire’s deep spectrum portfolio in the 2.5 GHz band. The carrier said the initial phase would include up to 5,000 cell sites in the 31 cities, with total plans for up to 8,000 sites as part of its first phase of deployment.
Crest also said in its statement that its funding bid would provide Clearwire with more time to consider alternative options, including the Dish Networks bid.
“Crest believes that Dish made a real and actionable proposal to purchase a portion of Clearwire’s excess spectrum some time ago but, for reasons known only to Clearwire, Clearwire has failed to complete such sale,” Crest noted in its statement.
As for Dish, the company placed an offering for up to $2.3 billion in senior notes that it said would generate proceeds to be used for “general corporate purposes, which may include wireless and spectrum-related strategic transactions.”
Dish, which late last year gained access to 30 megahertz of spectrum in the 2 GHz band from regulators, has repeatedly said it plans to become a disruptive force in the mobile space, with its co-founder and chairman Charlie Ergen telling a crowd at the 2012 PCIA Wireless Infrastructure Show that the company was looking to enter the space through a partnership with an established carrier. Most of the nation’s larger operators have been cited as potential partners for Dish, including Sprint Nextel and AT&T Mobility.
Ergen acknowledged that entering the mobile space will not be easy, but noted that Dish has a history of entering markets thought to be tough to penetrate and has succeeded. Despite his enthusiasm, Ergen was adamant that the company was not “suicidal” and would not enter into a venture with no chance of survival. That could mean an eventual sale of its spectrum holdings should that outcome be most beneficial to its investors.
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