CLWR - Clearwire

[txlaw]

I'm a big fan of reading as much as possible anything that Charlie Ergen has to say in Dish's CCs. He's extremely bright, forward thinking and insightful with regards to his industry and where it is going. I highly recommend the attached CC.

 

As has been discussed on here before, I just cannot imagine Ergen has not at a minimum considered sniffing around CLWR debt at under 30-cents on the dollar. He likes to shake things up, and he is very focused on diversifying Dish away from fixed video - why not kick-start a mini-consolidation within the lower end of the telco market via Spectrum Co./Sprint/Clwr/Dish?

 

Interesting stuff.

 

From the CC:

 

We have a lot more people that we can go to try to partner with. I think we have a better track record today. I think people will take us more seriously, but it doesn't mean you can get to something that makes sense. But there's 2 really big guys in wireless, in Verizon and AT&T, and they need some competition.

 

Charlie Ergen is great. 

 

I hope some of the investee companies that this board regularly discusses are able to pull off a viable strategy against the big dogs.

[brker_guy]

LightSquared: Five Questions of My Own

 

http://www.gpsworld.com/survey/lightsquared-five-questions-my-own-12287?utm_source=GPS&utm_medium=email&utm_campaign=Survey-Scene_11_10_2011&utm_content=lightsquared-five-questions-my-own-12287

 

 

[brker_guy]

I sure hope Sprint has Plan B lining up somewhere quick:

 

http://www.gpsworld.com/government/news/dot-gives-blank-stare-lightsquared-12298?utm_source=GPS&utm_medium=email&utm_campaign=navigate_11_15_2011&utm_content=dot-gives-blank-stare-lightsquared-12298

 

Because this LightSquared idea does not look good...

 

http://science.house.gov/lightsquared-impact-assessments

[bmichaud]

Burke ceo, how's my frickin sale lookin now? Pretty dumb, huh?

[txlaw]

Wow, so now things are really getting interesting.

 

http://blogs.wsj.com/marketbeat/2011/11/18/clearwire-as-mud/

 

Some choice quotes from the actual article referenced:

 

Clearwire Corp. is considering skipping a big debt payment that comes due in two weeks, a decision that could prove a turning point for a company that had hoped to cover the country with wireless broadband service.

 

. . .

 

"It's a very expensive payment that we have," Chief Executive Erik Prusch said in an interview. "It would be a significant drain of our cash, so we have to evaluate everything in terms of our decision of where we're going."

 

. . .

 

Clearwire's largest bondholders, Capital Research & Management Co., Fidelity Investments and MacKay Shields, a unit of New York Life Investment Management Holdings LLC, which would control the network's fate if it filed for bankruptcy. Capital Research and Fidelity are also among Sprint's largest shareholders.

 

All three firms met separately with Sprint this month and urged an alternative to Chapter 11 for Clearwire, arguing that the most cost efficient solution would be for Sprint to buy Clearwire in an all-stock transaction, a person familiar with the matter said.

 

. . .

 

Sprint directors "definitely" would oppose the notion of buying Clearwire simply to keep it out of bankruptcy, the person familiar with Sprint said.It is unclear how Sprint would react if Clearwire decides against making its Dec. 1 payment to conserve cash, the person said.

 

[JHelg]

All three firms met separately with Sprint this month and urged an alternative to Chapter 11 for Clearwire, arguing that the most cost efficient solution would be for Sprint to buy Clearwire in an all-stock transaction, a person familiar with the matter said

 

This makes so much sense and really seems like a win-win for everybody involved. Why would Sprint be opposed to this? There is obviously major dilution, but they don't burn through cash, and they would then have more spectrum under their control than they could possibly use for the foreseeable future. Sprint could replace Wimax with LTE with a portion of the 4 billion they recently borrowed (at an estimated cost of 600-700 million)--this would seem to put Sprint in a very competitive position. CLWR holders would be able to join in that position with a bucket of new S shares.

 

What am I missing?

 

I could see some of the other major holders of common (Google, Cox, etc.) opposing this for competitive reasons, and I'm not sure what it would take as far as their participation in approving something like this.

 

Thoughts?

[Cardboard]

One problem is Sprint covenants. Taking on this additional debt from CLWR on their book and they will breach them. That could be renegotiated IMO if Sprint could explain a clear strategy to its bankers and bond holders. For example, use Clearwire current architecture and overlay/complete the national roll-out with a revised form of Network Vision. Cheaper than the current network vision. Sell the unused spectrum to other players or be the Switzerland of broadband for other carriers. More earnings and some cash. However, have you seen any clarity from Sprint in the past 6 months?

 

They could find a way to make money here if they are creative and pay a decent price. The big cost is Clearwire's debt since they already own 54% of Clearwire. The equity would not cost very much since they only need to buy 46% and by now most holders would likely accept a lower price.

 

The other issue is what Clearwire is thinking about itself. They know how valuable the spectrum is becoming and their idea of selling capacity to players who will desperately need it in big centers and to smaller carriers like PCS makes a lot of sense. They also see that cable cos will need to expand into wireless broadband in a more meaningful way at some point. To exchange that business for a mix that include Sprint current business does not seem that attractive IMO. Would you accept a switch to Sprint shares with no premium?

 

I think that is why they are playing hardball with Sprint and that is just fair based on how Sprint treated them on October 7. They also know that LightSquared is facing a deadlines (one on November 30) and that further request by the FCC and others for continued testing means the end of that project. Clearwire moves automatically to spot #2 in Dan Hesse's grandiose plan. In any case, one can only hope that this will get resolved in a way that will help both companies.

 

http://www.bloomberg.com/news/2011-11-18/clearwire-plunges-on-report-wireless-carrier-may-miss-dec-1-debt-payment.html?cmpid=yhoo

 

http://www.forbes.com/sites/joanlappin/2011/11/19/clearwire-plays-hardball-as-sprint-stays-stuck-on-moneyball/?partner=yahootix

 

Cardboard

 

 

[Ben Graham]

Monday November 21, 2011 7:24 am PST by Eric Slivka

 

Sprint has released a new television commercial for the iPhone, pushing its unlimited data plan as an advantage over its rivals.

 

There are over half a million apps and counting on the iPhone. Apps that can take you anywhere, do anything. You might say there's no limit to what this amazing device can do. So the question to ask is, "Why would anyone want to limit the iPhone?" We don't.

 

Truly unlimited data for you iPhone...only from Sprint.

 

http://www.macrumors.com/2011/11/21/sprint-touts-unlimited-data-in-new-iphone-ad/

[brker_guy]

And the CLWR and Sprint Poker Game continues:

 

http://finance.yahoo.com/news/Clearwire-seen-reaching-rb-2621769865.html?x=0

 

:D ;D

 

Looks like, Dan "The Hustle" Hesse is going to get called on his bluff...

[alertmeipp]

so if they get the financing, then what?

[Guest ValueCarl]

Congrats to CLWR longs. Sprint has insured Clwr's path to success!

 

http://www.marketwatch.com/story/sprint-and-clearwire-announce-new-agreements-2011-12-01

 

http://www.telecomramblings.com/2011/12/clearwires-game-isnt-chess-and-isnt-chicken-either/#comment-7673

 

[brker_guy]

ValueCarl,

 

You meant , "Congrats to the CLWR Long and Strong" right? :D ;) ;D

 

Terms of the agreement with Sprint include:

 

    * Offers Clearwire Up to $1.6 Billion in Conditional Aggregate Revenues and Funding

    * Clearwire to Receive Total of $926 Million From Sprint for Unlimited 4G WiMAX Services in 2012 and 2013; WiMAX Network to Operate Through at Least 2015

    * Sprint to Provide Support for Future LTE Services

    * Companies Agree on Parameters for Additional Sprint Equity Investment

 

It seems to me that all of that "Sprint Network Vision" and those BS slides can be thrown out the window now if this deal includes services of WiMax services to 2015...

 

If CLWR gets its LTE networking running under this new cash infusion, Sprint would buy more shares!

 

Head, CLWR wins; Tail, CLWR still wins...

 

What a nice poker game Mr. Hesse plays!  That explains why he's a hired gun CEO worth millions, and Stanton is worth Bilions!

 

 

 

[txlaw]

I found this part of the press release most interesting:

 

TDD-LTE Collaboration

 

The agreements also lay the foundation for the deployment of Clearwire’s planned LTE Advanced-ready overlay network and outline the terms for Sprint to gain access to the additional LTE capacity. The TDD-LTE rollout will capitalize on Clearwire’s deep spectrum resources to deliver on 4G capacity needs over the long-term. Under the terms, Sprint will pay Clearwire up to $350 million in a series of prepayments over a period of up to two years for LTE capacity if Clearwire achieves certain build-out targets and network specifications by June 2013. The agreements also establish long-term usage-based pricing for LTE services for 2012 and beyond. The companies have agreed to collaborate on a network build plan and will jointly select LTE macro-cell sites to cover Sprint’s high usage area “hotspots.” Clearwire plans to seek additional funding before initiating the build-out of its LTE Advanced-ready network.

[Cardboard]

Looking at the agreement, I cannot find anything in there that is so worthwhile for Sprint to justify the mess that both companies have been going through since October 7.

 

For that alone, Dan Hesse should be fired. It shows a complete lack of leadership, understanding of capital markets and how to properly negotiate a deal. As a result, Sprint has received mentions from analysts such as: "uninvestable", the company has been downgraded by ratings agencies and has paid higher cost for its new capital.

 

If the guy is unable to deal properly with a sister company where they hold 50% of the equity, how can you expect him to deal properly with the likes of Apple, FTC, competitors and Sprint's customers?

 

Cardboard

[Cardboard]

http://finance.yahoo.com/news/Comcast-Time-Warner-Cable-bw-710862793.html?x=0

 

Interesting timing to say the least for Verizon Wireless to acquire spectrum from cable companies or the day after Clearwire extends its agreement with Sprint. Also, interesting that it is happening just after AT&T is seeing major issues with its T-Mobile merger. The issue that I see for us with this sale is that we are losing one customer or Time Warner Cable. Probably why the stupid stock is down today. There was also some hope I suppose that cable companies would get more involved in wireless creating more business for an independent such as CLWR.

 

Is there any way to find out what was the price paid per MHz POP for this spectrum and what are the frequencies? I am hoping that this sale will highlight to the investing community the value in Clearwire spectrum. I am also hoping that this sale will kick Ergen, Metro PCS or even AT&T to finally do something with their spectrum position and Clearwire.

 

Cardboard

[txlaw]

What I'd like to see is a market reassessment of CLWR based on the realization that the real estate we're sitting on is worth quite a bit more than the liabilities. 

 

If that happens, then there should be an equity offering that is sold at prices substantially greater than what CLWR is currently trading at.  That will get the ratings up on CLWR's debt, and CLWR can line up some more debt financing and sign some more pre-payment deals. 

 

Finally, the hope is that with time, both S and CLWR stock will appreciate, and there will be a stock for stock transaction for the entirety of CLWR by S. 

 

Added some more to my position today.

[brker_guy]

TxLaw,

 

Very good catch on this:

 

The companies have agreed to collaborate on a network build plan and will jointly select LTE macro-cell sites to cover Sprint’s high usage area “hotspots.”

 

It just hit me now why they are wanting to do this because the combining of spectrum by CLWR of 2x20MHz will provide spectral efficiency in urban & dense areas.  It's a unique competitive advantage that CLWR still has.

 

Cardboard, the French just recently had the LTE auction, and Orange paid for 40MHz (2x20MHz) of 2.6GHz similar spectrum real estate that CLWR controls.  Orange/FT paid 0.11 Euros or $0.145 per MHz-POP.  I think we should look at that similar figure for what CLWR holds:

 

http://coleago.wordpress.com/2011/09/29/vive-la-difference-ii/

[brker_guy]

Peter Burke,

 

If you know what AWS is, you will understand why VZ bought it from the Spectrum Co.  Not all Spectrum are created equal.  You need to know what spectrum VZ holds and what spectrum the Spectrum Co holds to come up with some logical conclusion.  If you don't know, you should not be saying stuffs like this:

 

Wonder why nobody, for now, wants clwr spectrum? what are it's limitations?

[Guest ValueCarl]

Ha, ha, ha, peterburkeceo.

 

<Wonder why nobody, for now, wants clwr spectrum?>

 

Can you say, old guard vs. emerging? Wait until that "old guard" in cable land attempts to gouge consumers at their pumps with "usage charges," they will learn how fast monopoly walls come tumbling down!

 

Comcast does have a CLWR hedge in place, however. Let's see what the satellite companies do next. 

 

On a related but unrelated note, I see Direct TV duly noted in a presentation by LVLT this morning (Slide 6), but Charlie Ergen's DISH is MIA. He won't be if he aligns with CLWR in some 'capacity' near term, however. I also noted one of his key spokesperson's in the past, having moved over to Big (3) recently as well.

 

The CURRENT SYSTEM is INEFFICIENT, UNSUSTAINABLE and always SCARCE. Only the "EMERGENT COMPANIES" have the ability to manage "SCARCITY" by moving forward efficiently, in order to be sustainable. 

 

http://www.veracast.com/webcasts/baml/credit2011/id84299900.cfm 

[txlaw]

Peter Burke,

 

If you know what AWS is, you will understand why VZ bought it from the Spectrum Co.  Not all Spectrum are created equal.  You need to know what spectrum VZ holds and what spectrum the Spectrum Co holds to come up with some logical conclusion.  If you don't know, you should not be saying stuffs like this:

 

Wonder why nobody, for now, wants clwr spectrum? what are it's limitations?

 

ok. I guess it's best not to ask questions.

 

Hmm, your post sort of came off as a rhetorical question, as opposed to an actual question about the characteristics of CLWR spectrum.

 

That's probably why you got the subsequent response by brker_guy.  If you're interested in actually learning about the spectrum characteristics, brker_guy would be the go-to guy for such a question, though I'm sure he'll keep that specialized knowledge in his pocket for now.

[Guest ValueCarl]

peter_burke_ceo, I have seen your snide, smarmy comments along with questions with hidden meanings known to yourself mostly, when they are being peppered over the internet inside of various venues, so to call them "questions" is an insult to this board!  >:(

 

 

Look at the full context behind what you just said including all of its implications that might be absorbed by any objective reader:

 

<wow pretty stunning. verizon bought a lot of 4g spectrum. But Not from clwr. Wonder why nobody, for now, wants clwr spectrum? what are it's limitations?>

 

Why don't you educate us to what you know, Peter?

 

If not, and assuming you're looking for FREE LUNCH, go see Ben Bernanke and the rest those free reigning, money grubbing, money printing, dictators and criminals at the pinnacle of the world banking system that causes much of society's woes! And tell him that your name is Jamie Dimon, by the way, and that the Rockefellers sent you! 

[txlaw]

What I'd like to see is a market reassessment of CLWR based on the realization that the real estate we're sitting on is worth quite a bit more than the liabilities. 

 

If that happens, then there should be an equity offering that is sold at prices substantially greater than what CLWR is currently trading at.  That will get the ratings up on CLWR's debt, and CLWR can line up some more debt financing and sign some more pre-payment deals. 

 

Finally, the hope is that with time, both S and CLWR stock will appreciate, and there will be a stock for stock transaction for the entirety of CLWR by S. 

 

Added some more to my position today.

 

I've been thinking about this a bit more after work. 

 

VZ has now teamed up with the best MSOs, and they will offer the best bundles of broadband and content in the nation.

 

T-Rex has had a setback with T-Mo, but they may do a spectrum pooling deal or buy up AWS spectrum from other parties (e.g., Cox communications).  If those deals get done, it will continue to bundle the U-Verse media subscription with its 4G service and U-Verse broadband.

 

Sprint has done a preliminary agreement with CLWR, but they need to come up with a source of funds that doesn't leave them a loser in this new world.  DISH would be the logical choice since they own both a content service (DishNetwork plus Blockbuster) and spectrum.  And check out this story: http://www.fiercewireless.com/story/sprint-signs-dishs-proposed-wireless-venture/2011-11-30

 

Cardboard, you may get your wish.

[Ben Graham]

Cantenna refers to a fixed-LTE offering -  from Verizon’s 4G LTE broadband with DirecTV broadcast satellite content.

 

http://www.ntca.org/new-edge/wireless/verizon-will-launch-fixed-lte-service-in-2011

 

- Ted Weschler held shares of DirecTV before Warren hired him.

 

- Buffett buys IBM, Intel and DirecTV.  (HughesNet Satellite Internet)

[Cardboard]

http://seekingalpha.com/article/311571-verizon-validates-clearwire-s-spectrum-value?source=yahoo

 

I thought this was an interesting and balanced article refering to my earlier question about the value of spectrum.

 

The other thing that will be interesting here is that Time Warner, Comcast and Bright House who are all investors in Clearwire will likely have to sell their stake after this exclusive deal with Verizon Wireless. Since Sprint is unwilling and likely unable to raise its stake above 50% to avoid carrying Clearwire's debt on its balance sheet or for it to be recourse at all, they will need a new player to show up at the table. That stake along with the up to $350 million that may be raised in an equity offering could represent an interesting position in Clearwire. I am thinking that once we find out who that is that we will get a pretty clear picture as to how wireless will be carved up in the U.S. going forward.

 

Hey by the way Peter Burke the CEO, have you noticed that my stock is no longer at $1 and change as you seem to like to say, but now at $2 and change.  ;)

 

Cardboard 

[Guest ValueCarl]

Cardboard, would you venture to state which technology company that is flush with cash it might be who adds to existing or builds new stakes in Clwr's valuable spectrum at this time? I can't see Google as an existing stakeholder being 'disinterested' subsequent tot this event, but there are a handful of others minimally who may be very interested.