It isn't surprising that a mega-merger didn't work out. Some estimates put the portion of mergers that never realize the value they were supposed to at three-quarters. According to management consultancy McKinsey, in the period from to , almost 90 percent of large mergers saw revenue slowdowns within three quarters of completing the deal.
There are many reasons: Higher costs than anticipated, less synergy than touted, poor performance, distracted employees and unsettled customers. Executives often pursue mergers for personal reasons. Ego can drive the desire to run a bigger operations and there may be financial incentives, including the increased amount of compensation a chief executive might argue for because of the newly swollen organizational size.
That doesn't seem to be quite the situation for the Clearwire acquisition. The purchase would give Sprint complete control over Clearwire's high-speed spectrum. More spectrum translates into faster performance for consumers and the ability to support more customers. Just one problem. Clearwire's weak financials had threatened to drag Sprint down with it, and Sprint had reduced its stake to less than 50 percent.
Soon after the Softbank announcement, however, Sprint struck a deal to buy out McCaw's stake in Clearwire. Remaining Clearwire investors include cable companies Comcast Corp. Google Inc. Sprint's offer for Clearwire continues a wave of deal-making in wireless this fall. Sprint's deal with Softbank is part of that trend, as is No. Clearwire Corp. Almost all of the rest are using Sprint devices. For the latest videos on gadgets and tech, subscribe to our YouTube channel.
Shares of Sprint Nextel Corp. Sprint, however, no longer sells WiMax phones, preferring to go with devices that run on its own LTE network. As a result, Clearwire supports existing Sprint customers with older devices and Sprint's prepaid services, Virgin Mobile and Boost Mobile, which still offer WiMax phones. So why is Sprint buying up Clearwire? As with most of the recent deals in the industry, this one was largely motivated by spectrum.
Clearwire has a valuable swath of spectrum that covers the country, which Sprint can use to augment its own 4G services. While Sprint had a majority stake in Clearwire, the relationship was structured so that the Clearwire board acted independently. That structure ensured Clearwire's board would act in the best interest of the company and all of its shareholders, and not just Sprint.
But it also resulted in some drama in the past. What kind of drama? Sprint and Clearwire famously clashed over the price that Sprint had to pay to run on Clearwire's network. Clearwire felt that Sprint was underpaying for the amount of traffic it ran on Clearwire's network, while Sprint believed that it was getting squeezed by a company with little leverage.
The result was stalled talks and Clearwire nearly losing its ability to meet its financial obligations as Sprint balked at paying a higher rate. It publicly manifested itself when Sprint unveiled its own 4G LTE plans and said start-up LightSquared would be its partner in moving to the next-generation network. It didn't hurt that LightSquare imploded under the weight of regulatory scrutiny over potential interference on GPS devices from its network.
OK, but what does this mean for Sprint and Clearwire customers? For now, not a lot. Sprint will continue to support and use Clearwire's WiMax network for existing customers with older phones, although Hesse said that the equipment would eventually be replaced with LTE radios.
Clearwire also has a small number of wholesale customers, including the recently unveiled FreedomPop home broadband service. Prusch wouldn't get into specific plans, but he said the smaller wholesale customers occupy a unique niche in the wireless industry, which bodes well for them. Ultimately, once Clearwire gets its 4G LTE network up and running, Sprint could see better coverage and less congestion.
0コメント