Verizon denies involvement in Clearwire spectrum sale

At least one company reported to be bidding for some of Clearwire's (NASDAQ:CLWR) spectrum has denied involvement in the auction process.

Verizon Wireless (NYSE:VZ) spokeswoman Nancy Stark told Reuters that the nation's largest carrier is "not participating in the Clearwire auction." Clearwire wants to sell some of its spectrum to raise between $2.5 billion and $5 billion, according to a Bloomberg report. That report, citing unnamed sources familiar with the deal, said Verizon, AT&T Mobility (NYSE:T), Sprint Nextel (NYSE:S), T-Mobile USA parent Deutsche Telekom and Clearwire investor Time Warner have expressed interest in acquiring the spectrum.

Representatives from AT&T, Sprint, T-Mobile and Time Warner declined to comment on the report.

Clearwire CEO Bill Morrow said at an investor conference in September that Clearwire hoped to secure more money via an investment by a company like T-Mobile or an auction of its unneeded spectrum. Bloomberg reported that Clearwire, which has around 120 MHz of spectrum in the 2.5-2.6 GHz band in most of its markets, is looking to sell of 40 MHz of spectrum in its markets. Verizon and AT&T are using mainly 700 MHz spectrum for their LTE buildouts. Clearwire maintains it is on track to cover 120 million POPs with mobile WiMAX by year-end.

Analysts, meanwhile, are divided over the prospect of Clearwire selling off chunks of its spectrum to raise cash for its buildout efforts. UBS analyst John Hodulik wrote in a research note that Clearwire will end the year with around $660 million in cash, and will need to raise $1.5 to $2 billion in the next two to four months to move ahead with its 2011 buildout plans. Due to these financial constraints, Hodulik said a spectrum sale would be a positive move for Clearwire.

However, Credit Suisse analyst Jonathan Chaplin said that although Clearwire's spectrum auction could lessen its financial dependence on Sprint, the move ultimately would be a mistake.

"We believe Clearwire and their spectrum are worth more longer-term if the spectrum is kept together," he wrote in a research note. The auction, he said, is "purely a consequence of dysfunctional squabbling between Sprint and Clearwire."

Investors seemed cheered by reports of Clearwire's spectrum auction. The company's stock popped yesterday morning from a close of around $6.75 per share to open at around $7.75 per share. The company's share were hovering around $7 per share in trading this morning.

For more:
- see this Reuters article
- see this Forbes article

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