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Clearwire Shares Soar 70% on Sprint/Softbank Report

Troubled wireless broadband carrier Clearwire could be a key piece in Japanese mobile giant Softbank’s moves to acquire Sprint-Nextel, a role that sent its stock up more than 70% Thursday.

According to a report in The Wall Street Journal, Softbank is in advanced talks to acquire a 70% interest in Sprint-Nextel for $12.8 billion. But a key part of those negotiations is the status of Clearwire.

That sent Clearwire shares skyward – the stock was up as much as 74% (96 cents each) on Thursday, closing the day at $2.22 each, up 70% (92 cents per share).

Sprint owns about 50.8% of Clearwire’s outstanding stock, with the remainder being owned by Comcast (13%), Intel (7%) and Bright House Networks (1.2%). Eagle River Holdings, a vehicle owned by cellular telephone pioneer Craig McCaw, owns 5% of Clearwire.

According to the Journal, Softbank, which is building its own WiMax network in Japan, believes the Clearwire spectrum is critical to its U.S. ambitions. The  paper reported that Sprint is attempting to resolve the Clearwire situation, possibly through an acquisition, but noted that such a deal “would have challenges.”

Comcast, Time Warner Cable, Sprint, Google, Intel and Bright House initially invested in Clearwire in 2008, contributing a combined $3.2 billion. But since that time several partners have dropped out, opting to take a huge discount on their original investment. Time Warner Cable sold its 7.8% Clearwire stake in August for $1.37 each or about $66.7 million, 88% less than its original investment. In March, Google sold its 29.4 million shares for $2.26 each, or $66.7 million, a substantial discount to its original $500 million investment.

In September, Comcast said it would convert its Class B Clearwire stake to Class A common shares, the first step in a sale. It could not be determined what Comcast plans to ultimately do with the stock or if its plans have changed in light of the Softbank talks. Comcast officials declined to comment.   

The cable companies invested in Clearwire to secure a wireless broadband play, and though Clearwire did build out several markets, it soon ran into cash problems and was overshadowed by another technology – LTE – which has since dominated the wireless broadband space.

Earlier this year, Clearwire announced plans to build an LTE network.
In the meantime, cable operators have found a new partner in the wireless broadband game. As part of its agreement to sell its wireless spectrum to Verizon Wireless for $3.6 billion, Comcast, TWC and Bright House reached a co-marketing deal with the wireless giant that allows both sides to sell the other’s products.