The FCC's review of Softbank's proposed $20.1 billion purchase of 70 percent of Sprint Nextel (NYSE:S), as well as Sprint's bid to take control of Clearwire (NASDAQ:CLWR), is on track, according to FCC Chairman Julius Genachowski.
Genachowski said Wednesday that the review is on a schedule "consistent with" the agency's nonbinding 180-day "shot clock" for evaluating deals, which runs through May 29. Analysts at Stifel Nicolaus wrote in a research note that his comments suggest that he believes the FCC will be able to decide on whether to approve the related spectrum licenses transfers by late May. However, other agencies, including the Department of Justice, FBI and Department of Homeland Security, also need to sign off on the deal.
"The comments also reinforce our expectation that the commission will approve the transactions, unless market developments intercede," Stifel analysts Christopher King and David Kaut wrote. "If the deals were raising heavy regulatory objections, our sense is the chairman would probably be more circumspect about timing."
Sprint CEO Dan Hesse, Softbank CEO Masayoshi Son and Clearwire CEO Erik Prusch met with Genachowski and other FCC commissioners last week to argue that regulators should approve their various deals. The companies have consistently said they expect the deals to close by mid-year. The Sprint-Clearwire deal is contingent upon the closing of Softbank's deal for Sprint.
The Stifel analysts note that even though the FCC review appears to be sailing along, the commission might impose merger conditions, especially with regard to Clearwire's spectrum. Sprint rivals, including Verizon Wireless, (NYSE:VZ), AT&T (NYSE:T) and Dish Network (NASDAQ: DISH), have argued that Clearwire's 2.5 GHz spectrum be considered for possible undue spectrum concentration. Clearwire commands around 160 MHz of spectrum in the top 100 markets, and Sprint has said its Network Vision network architecture would allow it to more efficiently deploy TD-LTE on Clearwire's radio waves.
Still, the biggest obstacle to the deals right now appears to be minority Clearwire shareholders. The shareholders, including Crest Financial, have repeatedly argued during the past several months that Sprint's $2.97 per share offer to Clearwire undervalues the company and its spectrum assets.
- see this Stifel Nicolaus report (PDF)
- see this CNET article
- see this ZDNet article
Clearwire shareholder Crest puts up more resistance to Sprint deal
Sprint, Softbank and Clearwire press cases for deals to FCC's Genachowski
Clearwire execs stand to rake in millions if Sprint deal goes through
Clearwire to take $80 million payment from Sprint, complicating Dish's bid
Sprint loses 337,000 net subs, lowers LTE coverage goal to 200M by year-end
Sprint held talks with 4 companies before clinching Softbank deal