DirecTV appears to be signaling an interest in partnering in some fashion with Clearwire (NASDAQ:CLWR), based upon a recent filing it made with the FCC. In the filing, submitted in regard to Verizon Wireless' (NYSE:VZ) proposed $3.9 billion deal to acquire AWS spectrum from SpectrumCo (a joint venture of cable companies Comcast, Time Warner Cable and Bright House Networks) and Cox Communications, DirecTV urges the FCC to require that the cable companies with a minority interest in Clearwire divest their holdings.
Representatives from DirecTV met on July 18 with Paul Murray, legal adviser to Commissioner Jessica Rosenworcel, and noted that the cable companies "neither intend to build their own wireless network nor view Clearwire as a 'viable' solution going forward." (The cable companies' deals with Verizon give the companies the option of reselling each other's services, and Comcast and Time Warner have already started to sell Verizon's wireless offerings).
"Allowing these MSOs to continue to hold minority ownership and management interests in Clearwire despite their new arrangement with Verizon Wireless would enable them to hamper further development of Clearwire's competing network and services, both by impeding new initiatives and by refusing to make additional investments," DirecTV wrote. "Third parties, in turn, will have less incentive to invest in or enter into strategic agreements with Clearwire, resulting in valuable spectrum remaining fallow." Therefore, DirecTV wrote, the FCC should require the cable companies to divest their minority holdings in Clearwire within six months.
Credit Suisse analyst Jonathan Chaplin wrote in a research note last week that Clearwire's future success will depend on it getting new wholesale partners or selling spectrum. "DirecTV's most recent filing is the latest evidence of interest" in Clearwire's spectrum, he wrote. "We believe that potential [Clearwire] suitors have been distracted by" Dish Network's efforts to get a critical FCC waiver for its 2 GHz S-band spectrum as well as the Verizon deal, "and that this latest development could create the sense of urgency needed to get a deal done."
Representatives from DirecTV did not immediately respond to a request for comment.
Last week on Clearwire's second-quarter earnings conference call, CEO Erik Prusch said the company is still looking for potential partners, but was deliberately vague. "As we have mentioned in the past, we have been and remain in active discussions with various parties who are interested in leveraging our assets to address the growing demand for broadband data in various ways, including, but not limited to spectrum acquisition," he said, according to a Seeking Alpha transcript.
Prusch said it is in the best interest of the company and its shareholders to keep such discussions discreet. "And while we have a sense of urgency in arriving at a strategic solution, we also believe our strong cash position provides us runway to be patient enough to strike not just any deal, but the right deal or set of deals for the company and its shareholders."
- see this filing
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