Clearwire and Sprint: Still the same old song and dance
Yogi Berra might as well have been talking about the ongoing saga of Clearwire (NASDAQ:CLWR) and Sprint (NYSE:S) when he uttered his infamous line, "This is like déjà vu all over again." Taking a digital stroll through Fierce's article archives reminded me of how the same issues and prognostications regarding these two companies keep cropping up again and again.
A few days ago, I wrote about Clearwire customers posting complaints on social media. Some customers claimed that their unlimited service was terminated for alleged excessive use, while others were upset that their data speeds appear to have been throttled. The article generated responses from a number of people, some of whom claimed they are disgruntled Clearwire customers. "Starting today [our service] was definitely throttled. After four phone calls to Clear we get no reason other than 'the tower is congested,'" wrote one commenter.
That's reminiscent of a situation that occurred in 2010, when customers alleged Clearwire was throttling data speeds to as low as 256 kbps, prompting the operator to acknowledge that some throttling was conducted to control traffic on individual towers during periods of peak usage.
Our recent coverage about Clearwire also included an article about investor Mount Kellet Capital Management urging the operator to sell off its excess spectrum for $9 billion to fund operations. Mount Kellet estimated Clearwire's spectrum is worth at least 38 cents per MHz POP. We've also run articles regarding Sprint Nextel's recent move to increase its stake in Clearwire from 48 percent to 50.8 percent by purchasing about $100 million worth of Clearwire stock from Craig McCaw's Eagle River Holdings. Despite that action, Sprint has been cagey regarding its plans for Clearwire and has emphasized that it does not control its partner.
Compare that recent coverage to these columns and articles from two years ago. The October 2010 column, "Clearwire's last resort has come," discussed reports that Clearwire was aiming to sell some of its vast spectrum holdings to raise between $2.5 billion and $5 billion. Clearwire's spectrum was being valued then at 20 cents to 40 cents per MHz POP.
And in "Sprint has no plans to buy out partners in Clearwire," Robert Brust, Sprint's CFO in September 2010, addressed questions regarding the company's plans for adding to its ownership stake in Clearwire and eventually taking control of the operator. "The path that's probably likely is that we'll continue to infuse some equity [investments] over the coming years and maybe some way down the road to take control of it," Brust said during an investor conference. "
That's old news, but when it comes to Clearwire, everything old is new again.
The fact that Clearwire and Sprint are dogged by many of the same questions and problems after more than two years indicates either an unwillingness or an inability to come to terms with the threats and opportunities that lay before them. If one believes that the definition of insanity is doing the same thing over and over and expecting different results, then Clearwire and Sprint must be candidates for some sort of intervention.
Of course, Softbank's planned $20.1 billion investment in Sprint is exactly that. And if the combined Sprint-Softbank eventually ends up taking control of Clearwire, whose" excess" spectrum now appears to be worth the top of its valuation range just 24 months ago, then maybe long-suffering Sprint has been crazy like a fox all along.
In retrospect, it appears the writing was on the wall two years ago.--Tammy