Sprint agrees to Clearwire acquisition

2012-12-29 15:57:37

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Sprint agrees to Clearwire acquisition
Sprint (NYSE:S) has reached an agreement to pay approximately $2.2 billion for the Clearwire (NASDAQ: CLWR) shares it doesn’t already own. The price tag equates to $2.97 per share for the approximately 50% of Clearwire shares outside of Sprint’s control. Sprint originally had offered $2.60 per share on November 21.The transaction, if approved, would put Clearwire’s enterprise value at approximately $10 billion, including net debt and spectrum lease obligations of $5.5 billion, Sprint says.Sprint says that by combining its wireless spectrum with Clearwire’s will strengthen its position and increase competitiveness in the U.S. wireless industry.“Today’s transaction marks yet another significant step in Sprint’s improved competitive position and ability to offer customers better products, more choices, and better services,” Sprint CEO Dan Hesse said. “Sprint is uniquely positioned to maximize the value of Clearwire’s spectrum and efficiently deploy it to increase Sprint’s network capacity. We believe this transaction, particularly when leveraged with our SoftBank relationship, is further validation of our strategy and allows Sprint to control its network destiny.”The transaction was unanimously approved by Clearwire’s board of directors. Meanwhile, Intel and cable MSOs Comcast and Bright House Networks LLC, who combined own approximately 13% of Clearwire’s voting shares, plan to vote their shares in support of the transaction, Sprint says. SoftBank also has consented to the transaction, as required under the terms of its recently announced merger agreement with Sprint (see "SoftBank to pay $20.1B for 70% of Sprint").Clearwire CEO and President Erik Prusch said, “Our board of directors has been reviewing available strategic alternatives over the course of the last two years. In evaluating available alternatives, a special committee conducted a careful and rigorous process, and based on the committee’s recommendation, our board unanimously determined that this transaction, which delivers certain and attractive value for our shareholders, is the best path forward.”As part of the deal, Sprint will provide up to $800 million of additional financing for Clearwire in the form of exchangeable notes, which will be exchangeable under certain conditions for Clearwire common stock at $1.50 per share, subject to adjustment under certain conditions. The agreements call for Sprint to purchase $80 million of exchangeable notes per month for up to 10 months beginning in January 2013, with some of the monthly purchases subject to certain funding conditions, including conditions relating to the approval of the proposed merger by Clearwire’s shareholders and a network build out plan.The transaction is subject to customary closing conditions, including regulatory approvals and the approval of Clearwire’s stockholders. The closing of the transaction is also contingent on the consummation of Sprint’s previously announced transaction with SoftBank. The Clearwire and SoftBank transactions are expected to close mid-2013.
Insight Research: Telecom spending to reach $223.3 billion in 2017
Global capital expenditure (capex) by telecommunications service providers is expected to increase at a compounded rate of 1.5% over the next five years, from $207 billion in 2012 to $223.3 billion in 2017, according to a new market report from The Insight Research Corp.The new study says capex in the various global regions will be uneven, with North America, Europe, and the Latin American-Caribbean regions showing little or no growth and only Asia-Pacific and Africa continuing to make investments in telecommunications hardware and software to keep up with burgeoning customer demand for new services. Capex among fixed-line operators continues to decline, while capex growth comes mainly from mobile operators in developing countries, who continue increase their capital outlays to meet pent-up demand for service.While demand for telecommunications services may be income-inelastic and industry revenues may actually grow over the forecast period, services in every global region will nonetheless come under heavy pricing pressure as operators fight over the cost-conscious customers who are quite willing to delay new device purchases, the market research report says."Customers in every region are pinching pennies and the demand for advanced applications is uncertain," says Insight Research President Robert Rosenberg. "The confluence of these trends means a further erosion of operator margins, which in turn will affect investments into infrastructures and new technologies since funding is now more difficult to obtain."The difficulty in finding funding now faced by many operators will certainly slow down, if not derail, the rolling out of investments in next-generation networks, WiMAX, LTE, and converged services, he warns.The report, entitled Telecommunications and Capital Investments: Impacts of the Financial Crisis on Worldwide Telecommunications, 2012-2017, provides capital spending forecasts for the U.S., Canada, UK, Germany, France, Japan, China, and India. On a per country basis, capex spending is subdividing according to fixed lines, mobile, and broadband. Forecasts are also provided for capex allocation by equipment, plant, software licenses, and "other."
NTT Europe lands in Vienna to deliver global IP network
NTT Europe, a member of the NTT Communications Group, says it has invested to extend its Tier 1 global IP network further into Central Europe with a new point of presence (PoP) in Interxion’s data center in Vienna.Clive Hamilton, head of global IP network at NTT Europe said, “Choosing the right hubs is key for us in getting closer to our customers and to providing the market with a greater choice of high quality IP providers."Vienna is a busy regional hub for Central and Eastern Europe, one of the most developed Internet markets outside of the three traditional core locations -- Amsterdam, Frankfurt, and London. Connectivity into and out of Vienna gives NTT Comunication's customers a much wider choice, increases the competitive landscape, and extends its fiber-optic network footprint to reach new customers.Interxion is a provider of cloud and carrier-neutral collocation data centers in Europe, supporting over 1,200 customers through 32 data centers across 11 countries. Its data centers provide space, power, and cooling with reliability and performance that exceeds industry standards, the company claims.Commenting on the decision to choose Interxion, Christian Studeny, managing director, Interxion Austria said, "NTT's network expansion into Interxion's data center in Vienna builds on their presence at seven of our other data center facilities across Western Europe. NTT are now well placed to benefit from the facility's close proximity to Eastern Europe, as well as from the presence of over 150 customers already in the facility, many keen to take advantage of their global network for connectivity to all regions of the world."
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