Sprint's Hesse looks beyond Clearwire for spectrum purchases

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Sprint Nextel (NYSE:S) CEO Dan Hesse is looking past the company's planned $2.2 billion acquisition of Clearwire (NASDAQ:CLWR) as he seeks to catch up to larger rivals Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T).

Hesse told Bloomberg that the carrier is looking to get more airwaves for mobile broadband through deals with other companies or through the FCC's auction process. The FCC's planned incentive auctions of TV broadcast spectrum are not expected to start until 2014. Sprint is also interested in bidding this year on an auction for the PCS H Block, spectrum that is complementary to its existing holdings.

If Softbank's $20.1 billion deal for 70 percent of Sprint is approved by regulators, the deal will give Sprint an infusion of $8 billion in capital, which it could use to buy more spectrum beyond Clearwire's. Clearwire commands around 160 MHz of spectrum in the top 100 markets, and Sprint said its Network Vision network architecture would allow it to efficiently deploy TD-LTE on those radio waves.

"Clearwire would give us a strong spectrum position for a period of time," Hesse told Bloomberg. "But we also have a very long-term view, and we would want to acquire more spectrum."

Sprint has already made some moves in the secondary market for spectrum. In November Sprint agree to pay U.S. Cellular (NYSE:USM) $480 million for some of U.S. Cellular's major Midwestern markets and spectrum. Under that deal Sprint will acquire 20 MHz of 1900 MHz PCS spectrum in various Midwest markets including Chicago, South Bend, Ind., and Champaign, Ill., and 10 MHz of PCS spectrum in the St. Louis market. The deal also includes customers and spectrum in other parts of Illinois, Indiana, Michigan, Missouri and Ohio.

Some analysts have also suggested that Sprint might a company like U.S. Cellular or Cricket provider Leap Wireless (NASDAQ:LEAP) to both beef up its spectrum reserves and its scale.

"Given the increases in data usage we are seeing, we will continue to be interested in spectrum as it comes to market," Hesse added. "It could be more deals like spectrum from other companies like we did with U.S. Cellular or it could be FCC auctions."

Sprint's actions follow on the heels of spectrum purchases by Verizon and AT&T. Verizon paid $3.9 billion to acquire nationwide AWS spectrum from a group of cable companies including Comcast, Time Warner Cable, Bright House Networks and Cox Communications. Verizon plans to begin turning on LTE services in its AWS spectrum this year in locations where it needs extra capacity.

Meanwhile, AT&T closed its $600 million purchase of NextWave Wireless, which will give AT&T additional 2.3 GHz WCS spectrum for its LTE network. AT&T also recently announced deals to acquire wireless spectrum and customers from Atlantic Tele-Network as well as a big chunk of Verizon's 700 MHz B Block spectrum for $1.9 billion.

Both Verizon and AT&T are ahead of Sprint in terms of deploying LTE; Sprint expects to cover 200 million POPs with LTE by the end of 2013. Adding more spectrum to its reserves won't necessarily help Sprint build out its LTE network faster, but it would let Sprint build a network with more capacity and faster speeds.

For more:
- see this Bloomberg article

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