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Thursday, December 13, 2012

Sprint Offers to Buy Remaining Stake in Clearwire for $2.1 Billion

Sprint Nextel is ready to flex its new financial muscle.

After striking a partnership with the deep-pocketed SoftBank, Sprint Nextel is moving to secure access to a big chunk of spectrum, offering $2.1 billion for the portion of Clearwire it does not already own. The deal, which values Clearwire at $4 billion, will help Sprint build out its next generation wireless network.

Under the terms of the deal, Sprint would pay $2.90 a share for Clearwire, according to a regulatory filing. Sprint, which currently owns 51.7 percent of Clearwire, will need SoftBank to sign off on the deal.

Sprint is bulking up in the face of increasing competition.

In October, T-Mobile USA announced plans to merge with a smaller network operator, MetroPCS. The combined company will have 42.5 million users, making it a closer competitor to Sprint, the No. 3 carrier.

Later in October, S print bolstered its own resources by selling a majority stake to SoftBank of Japan for $20.1 billion. With the deal, Sprint gained a well-funded partner to help finance the expansion of its network and pursue acquisitions.

“SoftBank brings so much more to Sprint than money,” Daniel R. Hesse, Sprint's chief executive, said at the time. “This investment provides the opportunity to benefit from the knowledge and expertise of a leader in mobile Internet technology with a proven track record of challenging larger incumbent carriers.”

Almost immediately, speculation mounted that Sprint would seek to buy Clearwire. Shares of Clearwire jumped on the day the deal with SoftBank was announced.

A couple of days later, Sprint increased its holdings in Clearwire, buying shares from Craig O. McCaw's Eagle River Holdings. The transaction gave Sprint a majority stake in Clearwire.

Sprint now wants to buy the whole company as part of its greater ambition to bui ld out its Long Term Evolution network. Sprint has already been converting its infrastructure, and the deal with Clearwire could help accelerate those efforts.