Report: Verizon wants to obtain Clearwire's spectrum

Verizon Wireless (NYSE:VZ) made an unsolicited offer to Clearwire (NASDAQ:CLWR) to purchase Clearwire's spectrum license leases in major markets for up to $1.5 billion, according to a Wall Street Journal report. The report, citing unnamed sources familiar with the matter, said that it is unclear whether Verizon has any interest in Clearwire beyond getting the spectrum licenses.

In a regulatory filing, Clearwire said a special committee of its board is reviewing an offer from an unnamed "strategic buyer" to purchase its spectrum license leases. The Journal said the unnamed party is Verizon. Clearwire's filing, made Friday, is notable in light of Dish Network's (NASDAQ: DISH) proposal to today purchase Sprint Nextel (NYSE:S), which envisions Clearwire's spectrum being a part of the combined company. Click here for that story.

According to the filing with the Securities and Exchange Commission, on April 8, Clearwire received an unsolicited, non-binding written proposal from "Party J," which Clearwire said is "a strategic buyer." Party J offered to acquire Clearwire's spectrum leases "generally located in large markets that cover approximately 5 billion MHz-POPs at a gross price of approximately $1.0 to $1.5 billion." The price would be reduced by the present value of what Clearwire pays to lease the spectrum, which could be substantial, Clearwire said.

Representatives for Verizon and Clearwire declined to comment.

The unsolicited offer would value Clearwire's spectrum at $0.20-$0.30 per MHz-POP on a gross basis, according to BTIG analyst Walter Piecyk, who noted that Sprint's $2.97 per share offer to take control of Clearwire values Clearwire's spectrum at $0.21 per MHz-POP. 

Clearwire has around 160 MHz of 2.5 GHz spectrum in the top 100 markets. However, any deal for its spectrum would face substantial hurdles because Sprint, Clearwire's majority owner, has a number of contractual rights to the spectrum that would make it difficult for an outside party to get control of the airwaves.

In the filing, Clearwire also noted that its board is "actively considering" whether the company will default on a $255 million interest payment due June 1 on about $4.5 billion of outstanding debt. In that event, the company would be forced to seek bankruptcy protection.

Clearwire urged its shareholders to vote in favor of Sprint's offer to take control of the company, but said that if the deal is not completed it will need to "explore all available alternatives, and substantial doubt may arise regarding" whether or not Clearwire can continue operating.

Last week Crest Financial, the largest minority shareholder in Clearwire, made good on its promise to wage a proxy battle in an effort to block Sprint's offer. Crest supports Dish's conditional $3.30-per-share counterbid to Clearwire and, along with other minority shareholders, contends that Sprint's offer undervalues Clearwire and its spectrum assets.

For more:
- see this WSJ article (sub. req.)
- see this SEC filing
- see this Bloomberg article
- see this Reuters article
- see this BTIG blog post (reg. req.)

Related Articles:
Clearwire shareholder Crest wages proxy fight to block Sprint deal
Clearwire shareholder Crest offers $240M to block Sprint deal
Clearwire takes another $80M payment from Sprint
FCC's Genachowski says review of Sprint/Softbank deal is on track
Clearwire shareholder Crest puts up more resistance to Sprint deal
Sprint, Softbank and Clearwire press cases for deals to FCC's Genachowski

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