Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Third largest wireless carrier in the U.S. – Sprint-Nextel Corporation (S - Analyst Report) – has been striving to achieve majority control over mobile virtual network operator (MVNO) Clearwire Corporation . Recently, the third largest telecom operator of Japan Softbank entered into an agreement to purchase a 70% stake in Sprint for about $20.1 billion, which in turn, is believed to have fuelled Sprint’s stake buying decision.  

Sprint is attempting to buy out Clearwire owner Craig McCaw’s holding stake in the company. This will place Sprint as a major owner of the MVNO with a stake of 50.45% up from 48.15% earlier. The additional 2.3% stake will cost Sprint around $100 million.

However, if the other major shareholders of Clearwire – like Comcast Corporation (CMCSA - Analyst Report), Bright House Network as well as chipmaker Intel Corporation (INTC - Analyst Report) – exercise their option of buying some of McCaw’s share, then Sprint’s majority stake would stand at 50.02%.  

Sprint offers fourth generation (4G) services utilizing the Worldwide Interoperability for Microwave Access (WiMAX) technology through a wholesale agreement with Clearwire. As a part of the agreement Sprint will pay Clearwire $926 million to use its unlimited WiMAX network and would also make prepayments of $350 million for LTE capacity, provided Clearwire meets certain build-out targets by June 2013.

Clearwire is building 4G LTE network using Time Division (TD) LTE duplex technology in the 2.5 GHz spectrum band — the same technology that Softbank uses in Japan. This is slated to help both the companies to improve their handset related ecosystems. 

The most attractive proposition from Clearwire is that it has access to a large chunk of spectrum. On the other hand, it lacks the financial resources to modernize its network.

We believe that as Sprint now has the financial back up commitment from Softbank, it will strive for control over Clearwire. Such a move would give it access to the MVNO’s additional spectrum which will put the third largest U.S. carrier in a much stronger position as compared to Verizon Communications Inc. (VZ - Analyst Report) and AT&T Inc. (T - Analyst Report).  

We maintain our long-term Neutral recommendation on Sprint-Nextel Corp. The company also retains a Zacks #3 Rank, implying a short-term Hold rating.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%