Sprint (Finally) Buys Clearwire for $2.2B

12/17/12Follow @curtwoodward

Clearwire and Sprint have been attached at the hip for years, but that doesn’t mean it’s been a lovefest.

Today, we’re seeing the final chapter in that up-and-down relationship, as Sprint has agreed to pay some $2.2 billion to buy out Clearwire’s other shareholders and take the wireless network wholesaler off the market.

The deal, for $2.97 per share, values Clearwire at $10 billion. Sprint will assume Clearwire’s debts and spectrum lease payments, which amount to about $5.5 billion, the companies said in a press release.

The deal had been in the works for some time, and Sprint took things public last week with a slightly lower offer.

Sprint’s buyout closes the book on the twisting tale of Clearwire, which was founded by wireless pioneer Craig McCaw. The Bellevue, WA-based company jumped out ahead of other industry forces with a plan to build a fourth-generation, or 4G, wireless network.

But Clearwire moved too early—its network was based around a technical platform known as WiMax, but the rest of the wireless business eventually settled on a competing technology called Long-Term Evolution, or LTE. McCaw stepped down as company chairman in late 2010.

Clearwire was left financially struggling as it tried to play catch-up and remake its entire network. And as Clearwire stumbled, majority shareholder Sprint (NYSE: S) has seemed like a reluctant savior.

In October 2011, Clearwire (NASDAQ: CLWR) shares dropped after Sprint said Clearwire wasn’t part of the carrier’s long-term network upgrade plans, and bounced up again just weeks later when Sprint signed an agreement to help pave the way for buying Clearwire’s wholesale service.

Last December, Sprint came to the rescue with a $1.6 billion deal that helped Clearwire make a crucial debt payment, and bought a big chunk of stock in a sale that netted Clearwire more than $700 million to help build its newer LTE network.

Why so much turmoil around a company that made the wrong bet on a technology standard? In a heavily regulated industry that has to get its lifeblood from federal regulators, Clearwire has always had some wireless spectrum holdings to fall back on.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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