How Sprint Nextel Is Positioning To Win Market Share

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Smartcomm believes Softbank and Clearwire transactions could make the carrier a strong contender

"Ultimately, Sprint appears outwardly confident that SoftBank and Clearwire will position the company favorably... " - Carole Downs, Smartcomm CEO

New Sprint On The Horizon
As holders of 700 MHz and 800 MHz spectrum licenses, Smartcomm continually reviews and analyzes the activities of other license holders in these bands, especially Verizon, AT&T and Sprint Nextel. The potential of Sprint Nextel is particularly interesting to Smartcomm in that if Sprint is successful in accomplishing it’s near term goals they could become a much bigger player in the mobile broadband space. SoftBank, the third-largest wireless carrier in Japan, is proposing to purchase Sprint Nextel (“Sprint”). In exchange for new capital of $8.0 billion and an additional $12.1 billion to be distributed to shareholders, SoftBank will acquire a 70% ownership interest in a new entity known as New Sprint. If approved, the deal would give New Sprint and SoftBank combined weight to make notable advances, such as driving down the price of devices due to economies of scale. Coincidentally, Sprint is also working on technology that would allow it to deploy those devices simultaneously across its various brands like Boost Mobile and Virgin Mobile, to ensure the carrier can sell in multiple places. Sprint has said previously that it plans to ultimately run LTE across 1900 MHz, 800 MHz, and 2.5 GHz frequency bands and that Qualcomm is building chips to support those.(Fierce Wireless - 1) Masayoshi Son, Chairman and CEO of SoftBank, indicated SoftBank could “leverage its expertise in smartphones and next-generation high-speed networks, including LTE, to drive the mobile Internet revolution in one of the world’s largest markets” and create a more competitive American wireless market.(Urgent Comm - 2) Sprint Nextel is certainly in favor of that and joining these two companies together appears to offer advantages for both.

On January 29th the Department of Justice asked the Federal Communications Commission (“FCC”) to wait on approval of the deal until investigations are completed into national security and public safety issues, a fairly routine request in response to a foreign company seeking ownership of a U.S. telecommunications company. Incidentally, the FCC indicated just last week that their review is on schedule and Sprint continues to anticipate the transaction will be completed in mid-2013.(Fierce Wireless - 3)

The Clamor For Clearwire
Clearwire holds and leases massive amounts of 2.5 GHz spectrum in the U.S., as does SoftBank in Japan. Therefore, Sprint’s acquisition of Clearwire is a key factor in achieving economies of scale for the New Sprint/SoftBank. Dish Network (“Dish”) surprised many in January when it bid to purchase approximately 24 percent of Clearwire’s total spectrum holdings for $3.30 per share. This deal is in direct competition with Sprint’s offer of $2.2 billion made in December to buy 49 percent of Clearwire shares for $2.97 per share. Sprint was quick to respond and point out that the transaction is not viable given Clearwire is prohibited from selling spectrum without Sprint’s consent. Dish, however, has asked the FCC to stop review of the SoftBank acquisition of Sprint until the issues related to Clearwire are resolved. Most analysts believe that Dish will fail in its attempt to purchase a stake in Clearwire. Dish’s bid, however, may temporarily complicate Sprint’s acquisition and could likely result in shareholders demanding a higher per share price from Sprint.(Fierce Wireless - 4)

Network Vision
Network Vision is Sprint’s plan to have one consolidated network with increased efficiencies and enhanced coverage, call quality and data speeds.(Seeking Alpha - 5) This includes deploying a new 3G network and rolling out 4G LTE nationwide. The company is in the process of shutting down its Nextel iDEN platform and will soon deploy CDMA voice and LTE on its 800 MHz spectrum. Sprint currently has launched LTE on its 1.9 GHz spectrum in 49 markets and they expect to have coverage for approximately 200 million people by the end of 2013.

"Ultimately, Sprint appears outwardly confident that SoftBank and Clearwire will position the company favorably, allowing it to finally compete effectively against the duopoly of Verizon Wireless and AT&T Mobility.", says Smartcomm CEO Carole Downs.

About Smartcomm, LLC
Phoenix-based Smartcomm, LLC provides consulting services and opportunities in the wireless communications industry to both individual and institutional clients. The company specializes in opportunities to acquire spectrum to be used for mobile broadband, through the filing of license applications, participation in FCC public auctions, or acquisitions in the secondary market.

(1) Fierce Wireless
(2) Urgent Comm
(3) Fierce Wireless
(4) Fierce Wireless
(5) Seeking Alpha

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