Shareholder worries about Sprint Nextel’s growing involvement with Clearwire Corporation (CLWR)

A shareholder in Clearwire Corporation(NASDAQ:CLWR), Mount Kellett Capital Management LP, warned the board members of the company about the growing powers of Sprint Nextel Corporation(NYSE:S) upon the company, in terms of shares. The New York based investment agency is shareholder in Clearwire, with 7.3 percent of the stocks, and Sprint Nextel has recently acquired more stocks of Washington Company, to stand with 50.8 percent of all the shares. Mount Kellett wrote a letter to Clearwire on Thursday, in which it asked the board members of the company to be wary of the growing control of the shares by Sprint Nextel. The company warned Clearwire of how it could negatively affect the value of the company.

The CFO of Mount Kellett, Jonathan Fiorello, write in the letter, demanding more clarity from Sprint Nextel, about its intentions, with regard to the future of Clearwire. The private investment firm demanded a clear answer from the company. It suggested that the company should either formally agree to not buy up more stocks or take up the seats of the board, or the company should produce a tender offer, which would allow the other shareholders to realize the stakes with respect to Clearwire. The letter which was sent to Clearwire, was filed, on the very same day, by the company, with the Securities and Exchange Commission, or the SEC.

This growing insecurity displayed by Mount Kellett, comes after Sprint Nextel acquired more stocks in October. This happened just after SoftBank Corp., the Japan-based wireless carrier has announced its decision to get 70 percent of the shares of Sprint Nextel. This has been causing Mount Kellett a lot of worry, which is why the firm is demanding clarification regarding Sprint Nextel’s role in Clearwire.

Clearwire, however, has stated that despite the growing stakes in the company, Sprint Nextel has no intentions of controlling the company in any way, and the number of board members representing the company shall remain the same, which is, seven of the thirteen board seats for the directors will be given to Sprint Nextel. However, it looks like Mount Kellett is not satisfied with the answer, and they are demanding clarity for all the lesser shareholders. 

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Votel Mobile’s cheap and affordable schemes introduced under Sprint Nextel Corporation(NYSE:S)’s network

There have been many MVNOs which have been joining under the network by Sprint Nextel Corporation(NYSE:S). The Platinum Mobile Brand, which is operated by Macalester Telecom of America, is also under the Sprint bandwagon. Votel Mobile is the newest MVNO is the block. However, if the users or the prospective users are looking for innovative schemes, then there aren’t any. The company has decided to keep options simple and uncomplicated. Its biggest advantage is the fact that it provides really cheap service. In fact, Votel Mobile provides cheaper service than most other prepaid providers who give out unlimited schemes in tier 1and tier 2.

The company has introduced two very basic plans which are very cheap and affordable. The first one is for $33.33 per month, and is the standard “Unlimited” Plan. The second one is the “Android Smartphone Unlimited Plan” under which, the user will have to pay $43.33. These figures are inclusive of the taxes and the other such charges, and therefore, are not deceptive at all. The Votel Mobile connection can be used by three smartphones currently, which are: LG’s Optimus Elite, Replenish, by Samsung, and Kyocera Milano. Apart from smartphones, the connection can be used with normal phones such as the basic ones from Kyocera, Sanyo, as well as LG.

Jeff Javidzad, who is the CEO of Votel Mobile, stated that the company was built by veterans in the mobile industry, who know what the customers want. Instead of trying to make things complicated, the best strategy, they thought, would be to provide simple, uncomplicated and affordable service to the customers. They have tried to dispel the hang-ups which usually come with cheap services. Opting for one would usually be followed by very poor service and limited hand-set selection. The company tries to keep everything simple by not entangling the customers into contracts, catches and conditions. Votel Mobile was built on the clause that the company would provide good service at cheap rates.

After Sprint launched the offer of any company becoming an MVNO, there have been many brands joining under the Sprint Nextel network. However, this has not lead to particularly good business, or a drastic change in revenue for the network.  

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Stocks In News: Altria Group Inc. (NYSE:MO), Sprint Nextel Corporation (NYSE:S)

Altria Group, Inc.(NYSE:MO), which makes the well-known and iconic Marlboro brand of cigarettes, reported a 44 percent fall in net income in the third quarter, due to charges for a loss on early retirement of debt.

On the flip side it did sell more cigarettes and at higher prices and also managed to expand its market share.

The group, which owns cigarette maker Philip Morris reported net income of $657 million, or 32 cents per share, for the three-month period ended Sept. 30, down from $1.17 billion or 57 cents a share, a year earlier.

Earnings were impacted by previously announced plan to buy back $2 billion in debt, which resulted in a charge of $874 million in the third quarter. Adjusted earnings were 58 cents per share, matching Wall Street expectations.

The company said revenues, excluding excise taxes, rose about 3 percent to $4.46 billion as higher costs to promote its top-selling Marlboro brand were offset by higher prices and volumes. Analysts expected revenue of $4.36 billion.

Meanwhile network services provider Sprint Nextel Corporation(NYSE:S) on Thursday said that its number of subscribers fell in the third quarter, for the first time in two and a half years, as customers switched to other service providers, fed up with the Nextel network.

Sprint lost an overall 423,000 subscribers in the July to September period, as trends across its product line-up were weak.

Sprint's loss was $767 million, or 26 cents per share, for the July-September quarter, from a loss of $301 million, or 10 cents per share, a year ago.

Revenue rose 5 percent to $8.76 billion.

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Sprint Nextel Corporation (NYSE:S) Might Control more than 50% of Clearwire Corporation (NASDAQ:CLWR)

Sprint Nextel Corporation(NYSE:S), backed with funds from Japanese cellphone company, Softbank, is negotiating a deal to pay a sum of $100 million to gain majority control over the wireless network operator, Clearwire Corporation(NASDAQ:CLWR). If pioneer Craig McCaw accepts the offer, then Sprint’s voting stake in the company will move to 50.45% from 48.15%. Shares of Sprint went up 5 cents to $5.78 a share.

Although Clearwire controls a big sector of the nation's airwaves, it is lacking in funds required to revamp and expand its reach. Sprint was facing financial constraints as well, till Softbank decided to purchase 70% of Sprint for $20.1 billion. Shares of Clearwire went down 10.20 cents or 10.20% to $2.03 in Thursday trading.

Analyst Christopher King stated that Clearwire shareholders would have been happier if Sprint bought the entire company, but even if Sprint controls a majority, it is certainly brightens up the future of the cash-strapped company. Even if cable companies Comcast and Bright House Networks and chipmaker Intel, which are Clearwire's other major investors, purchase some of McCaw's shares, Sprint will still gain control at 50.02%.

A portion of Sprint’s operations were maneuvered into Clearwire in 2008, which gave the former a stake slightly over 50%, but the former’s financial status forced Sprint to cut down its stake to below 50 %. Sprint is also a wholesale purchaser of Clearwire’s wireless network, which they resell as Sprint 4G. However, Sprint is developing its own 4G network so that future of Clearwire’s network is uncertain.

Apparently, Softbank owns a 4G network back in Japan, with technologies and frequencies similar to what Clearwire’s planned new network uses, which is a subtle indication that the technology will be jointly harnessed.

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Clearwire Corporation (NASDAQ:CLWR) Shares Lost Momentum As Takeover Expectations Vanished

Shares of Clearwire Corporation(NASDAQ:CLWR) fell as much as 17.10 percent on Tuesday trades on speculation that Sprint Nextel Corporation(NYSE:S) would not be bidding to raise its stake in the company any time soon. Before today, shares of CLWR had gained 100% in the past one week.

On Monday, Japan's No. 3 network carrier made a deal with Sprint to buy a 70 percent controlling stake in the U.S. carrier for $20.1 billion.

Bloomberg said that the deal between Softbank and Sprint would take about six to eight weeks to close and during that time both companies are restricted from engaging in any activity involving mergers and acquisitions.

Clearwire's shares had risen as much as 16 percent on Monday, when the deal was announced on hopes that the Softbank would help in Sprint taking a controlling stake in it.

However under the terms of the deal it looks like this will not be happening, at least not within this year.

“Sprint doesn’t need to own Clearwire now, as they already paid $900 million to lease the spectrum they need for 2012 and 2013,” Robert Chapman, founder of hedge fund Chapman Capital LLC told Bloomberg.

“Sprint may be better off buying 700 megahertz spectrum.”

Softbank chief Masayoshi Son had declined to answer a question about Clearwire when queried by an analyst. "“I don’t talk about any specific detail of our strategy. I never do that in advance,” he said.

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Why Softbank acquired Sprint Nextel Corporation (NYSE:S)?

Softbank's acquisition of a majority stake in Sprint Nextel Corporation(NYSE:S) for $20.1 billion has surprised a good many people, including analysts who feel that it does not make much sense for the Japanese company to make the purchase.

Investors showed their displeasure by hammering down the price of the shares as soon as news of the deal leaked out a week before it was formally announced. Among the analyst community Standard & poor's placed some securities issued by the company on credit watch with negative implications as it felt that the acquisition would have a negative impact on the financials of the company.

So why did Softbank go ahead with the acquisition anyway?

According to a blog on MarketWatch, one of the key reasons could be the strength of the yen. "At an exchange rate of about 78 yen, the U.S. dollar is today a third cheaper than it was in March 2006, when Softbank acquired Vodafone’s Japanese operations. A weaker dollar makes cross-border acquisitions in the U.S. cheaper for overseas companies."

Apart from this Softbank president Masayoshi Son had offered three reasons why the acquisition was so crucial to the company.

Reason 1: At $20.1 billion for a 70 percent stake that gives it management control of Sprint, this is the largest overseas acquisition ever by a Japanese company but in terms of valuation, it is still cheaper than Softbank's purchase of Vodafone's Japanese operations in 2006, he said.

Reason 2: The cost of funding is fairly low at just about 1 percent as the deal has been financed mostly through cash and a bridge loan from three Japanese megabanks and Deutsche Bank.

Reason 3: The combined might of Softbank and Sprint make them the third largest mobile carrier in the world, tying with AT&T and just behind China Mobile and Verizon. It also gives Softbank a critical entry into the United States, which is the world's largest smartphone market.

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Softbank will take over 70% of Stock in Sprint Nextel Corporation(NYSE:S) - Clearwire Corporation (NASDAQ:CLWR)

The news is confirmed – A Japanese telecommunications company has acquired a 70% of a wireless carrier, in what is believed to be the biggest international deal for a Japanese firm, with a whopping $20.1 billion! The two companies mentioned are Softbank and Sprint Nextel Corporation(NYSE:S) respectively and the revamped publicly traded firm will be known as “New Sprint”

Stock of Sprint Nextel ended lower by 0.70% in Monday trading. The stock has shot up ever since the impending acquisition came on the news. The deal is awaiting the approval of Sprint shareholders and involves a 36% premium to the average share price of the company over the last two weeks.

Softbank will be able to take on rivals in the wireless market such as AT&T and Verizon, due to its holdings in Sprint. SoftBank founder and CEO Masayoshi Son is a tad nervous, as was implied in a recent press conference, because the US market poses a great challenge as it is a brand new territory with its own trends and they need to start from scratch.

The combination of the two companies will include a 96 million customer base. Sprint Nextel itself is a merger of two firms back in 2005, which is currently the 3^rd largest wireless carrier in the US. The reason for Softbank’s acquisition of Sprint is because growth opportunities in the domestic wireless market in Japanhave slowed over the years, whereas the US market shows promise.

There are some investors who are not too sure about Softbank taking over 70% of Sprint as the telecommunications firm is supposedly $15 billion down in debt and has incurred losses in the last 19 quarters. In fact, Softbank shares have plummeted more than 20% in Tokyo trading when the two companies started negotiations.

Regulators and Congress has given a clean chit to the deal though. The House intelligence committee dispatched a report to US companies, forbidding them to indulge in deals with Chinese telecommunications firms like Huawei and ZTE. Apparently, the telecomm giants have links with the Chinese government and might use their technology to gain information about US consumers, businesses and the government.

On the other hand, shares of Clearwire Corporation(NASDAQ:CLWR) rose 16% to $2.65, well off new highs of $2.95. The stock is down 16% in the pre-market session.

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Clearwire Corporation (NASDAQ:CLWR) Shares Boosted By Sprint Nextel Corporation(NYSE:S)’s Deal

Clearwire Corporation(NASDAQ:CLWR)’s shares are among the big gainers and volume buzzers on Monday as the stock soared 25% to $2.90 on news that Japanese cell phone company Softbank Corp. has finally agreed to buy a majority stake in Sprint Nextel Corporation(NYSE:S).

Shares of CLWR have been popping up since last week when a report revealed that Sprint may be acquired by Softbank. CLWR is half owned by Sprint.

Sprint rely on Clearwire’s LTE technology, which couldn’t be successful unless CLWR found Sprint, which Sprint resells as "Sprint 4G." Clearwire has struggled to become a viable standalone company, and it needs additional funding to upgrade its network.

That said, the Softbank deal does not require Sprint to take any action regarding Clearwire, according to a regulatory filing announcing the transaction on Monday.

Shares of CLWR have soared 122% in the past on week and made a new 52-week high of $2.95 this morning with more than 27 million shares have traded within first 30 minutes of trading. Shares of Sprint also rose 1.50%.

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