We Confirm the Prior Prediction the FCC and DOJ Will Approve Softbank's Acquisition of Sprint and Roll-up of Clearwire
Softbank's acquisition of financially strapped and competitively challenged Sprint has made good sense for the industry and the public in our opinion. IN fact, we encouraged consideration of Softbank starting two years ago as it became apparent that Sprint reforms under Hesse would come up short in raising the company to the next level of competition without outside funding. Softbank has offered critical lead in experience and technologies used in small cell HetNet approach to deployments, mobile video services and devices, 2.6GHz IMT-Extension band, and accompanying web and cloud services that add to their attractiveness as a suitor.
The FCC had earlier signaled that no obstacles have stood in the way. Julius Genachowskii, former FCC Chairman, had said over four weeks ago that consideration of the acquisition and roll up of the Clearwire spectrum into New Sprint was occurring on schedule without issues likely to cause it to become derailed. Long before that, rationale had lined up for the approval. The burnt of this rationale is 1) Sprint is in dire need of being bolstered in order to compete on a higher level playing field going forward, and 2) the industry at large needs for the 2nd, Sprint, and 3rd, T-Mobile, mobile/ICT competitors to become more balanced in competition with Verizon and AT&T.
Here are a few further predictions of the FCC decision:
aThere will be no major spectrum carve-outs of the combined Sprint-Clearwire spectrum.
bThe FCC will issue minor rulings on access to the 2.6GHz EGS-BRS spectrum to encourage wholesale access and data roaming.
cThe approval will strengthen Sprint's bid to acquire Clearwire by clearing the way for capital commitments regardless of the shareholder approval.
Sprint Needs This
Sprint has come during the past four years to find its technology direction and define a competitive long term plan. However, Sprint remains under-sized and behind the eight ball in coming up to speed in the pace of deployment and consolidation of networks and fielding of a competitive edge in services. Verizon, the consumer marketshare leader, has a proven advantage in coverage and services that translates into enhancement of market dominance. AT&T has strength in consumer, government and enterprise markets that is entrenched. Sprint now faces end of life issues in their WiMAX network and device strategy while deployments into narrow bands of spectrum fails to support the unlimited broadband market stance. The tact of unlimited broadband will backfire if not fulfilled with higher level of deployments into freed up 800MHz, increased 10x10 AWS-4, and more aggressive deployment into Clearwire's 2.6GHz band.
To make a very long story short, ahead of announcements of details, we conclude that Sprint will be acquired by Softbank and will, in turn acquire Clearwire, if not outright in the near term, then in terms of ability to deploy aggressively with the knowledge full control will be forthcoming.
We also have expressed our opinion that DISH would be unsuccessful in acquiring Sprint or Clearwire. As time has marched on towards the conclusion of the regulatory review process, we have gained confidence that would be the case despite DISH's stepped up efforts to secure funding commitments, debunk Softbank, etc.
Softbank Approval to Acquire Sprint is Imminent. With few restrictions to restrain acquisition of spectrum or impede ramp in competition, the FCC and DOJ's approval will signal a heightened level of mobile broadband and video everywhere competition
- Stay tuned for more as details become available.
- Our new report on Softbank-Sprint-Clearwire is available for purchase.
- DISH's attempt to acquire Sprint will have little chance of moving forward.