Sprint’s Buyout of Clearwire Unlikely to Face Major Regulatory Issues, Experts Say

Sprint Nextel’s successful bid to buy full ownership of Clearwire is unlikely to face a tough time winning regulatory approval, industry legal experts told us. Sprint, which already owned 51 percent of Clearwire, said Monday that Clearwire’s other shareholders had unanimously agreed to sell Sprint their 49 percent stake for $2.2 billion. That deal represented an improvement from the $2.1 billion Sprint offered last week (CD Dec 14 p15).

Sprint said it believes the purchase gives it a unique opportunity to maximize the value of Clearwire’s 2.5 GHz spectrum and use it to increase Sprint’s network capacity. “We believe this transaction, particularly when leveraged with our SoftBank relationship, is further validation of our strategy and allows Sprint to control its network destiny,” said Sprint CEO Dan Hesse in a joint statement with Clearwire (http://xrl.us/bn6wrv). Sprint’s successful bid for Clearwire came more than two months after SoftBank bought 70 percent ownership of the carrier for $20.1 billion (CD Oct 16 p1).

As with SoftBank, Sprint’s deal with Clearwire is unlikely to encounter any significant regulatory issues, said Andrew Schwartzman, a public-interest communications lawyer. The FCC’s approval process on the Sprint-Clearwire deal should be “fairly perfunctory,” said Steve Goodman, a partner with the law firm Butzel Long who previously worked at the FCC and as an attorney on antitrust and regulatory issues at Comsat. Sprint’s existing 51 percent ownership of Clearwire is particularly important, because a shift to full control is unlikely to be seen as creating adverse effects on competition, Goodman told us, noting that the two “were already basically working in parallel/partnership.” However, Sprint’s past petitions against other carriers may come back to haunt it, Goodman said, with some using the regulatory process as “an opportunity to return the favor and try to throw some sand in the gears. Any such efforts might delay the commission’s approval, but would not prevent it."

The Clearwire purchase should also get approval from federal regulators because it strengthens Sprint’s position against No. 1 carrier Verizon Wireless and No. 2 carrier AT&T, allowing more competition in the marketplace, a regulatory analyst told us. Michael Copps, a former FCC commissioner who is opposed to further carrier consolidation, disagreed, saying the consolidation implications in the Sprint-Clearwire deal merit FCC scrutiny. “If I was still on the commission, I'd be taking a good hard look at it,” he said.